As an Englishman, I have a natural tendency to steer clear of hyperbole, but, looking at the evidence over the last few weeks, it could just be that this past month or so has marked a sea change in the story of the little digital currency that could. We may well look back on this time at some point as the time that changed everything for bitcoin.
Many more people than would usually be the case will be aware of these changes as media coverage of bitcoin has been extensive in the last week, and, thankfully the more reasoned tone that I pointed out last week in these pages has continued. What has prompted that interest is the dramatic surge in the price of bitcoin that we have seen. After breaking the $300 barrier on Coindesk’s Bitcoin Price Index (BPI) on Wednesday of last week BTC/USD continued to climb, powering through $400 by Tuesday of this.
Rather than issuing dire warnings about a bubble that is about to pop messily as would have been the case in the past, however, most of the coverage has been, like this USA today piece, about the legitimate underlying reasons for the rise. First among those is the simple fact that even government bodies are now coming to accept that bitcoin actually is a currency.
On October 22nd the European Court issued a ruling that as far as they were concerned, that was the case. This may seem like an obvious thing to some, I mean bitcoin is a token used in transactions, which kind of makes it money by definition, but until recently that seemingly obvious fact had eluded major governments. Some saw it as a commodity while many seemed to be attempting to ignore it, as if somehow their lack of recognition could put the genie back in the bottle.
There are other reasons for the jump in price, too. As Chinese exchange controls begin to bite there are surely a lot of people in that country looking to move some money somewhere that can escape those rules, for example. As the USA Today article linked to above points out, though, one of the biggest drivers of momentum is the number of Wall Street funded projects and businesses that are popping up in the Bitcoin space.
These have created their own demand for bitcoin in themselves, but the pitches seem also to have convinced many influential people of the potential of not just the blockchain, but also bitcoin. That has led to a sight that I am sure many supporters of digital currency never thought they would see – a representative from Wedbush Securities being interviewed on a financial TV station about the company’s price target for BTC/USD.
I, and I’m sure many others who are familiar with bitcoin, just about fell off of my chair when I saw that, but the matter of fact way in which the story was presented made bitcoin seem like any other currency. For those gaining exposure for the first time the very lack of sensationalism would have been powerful.
Of course there are still those among the financial community who remain opposed to the idea and, reminiscent of ostriches when faced with danger, are keeping their heads firmly in the sand lest anything threatening should appear on the horizon. Jamie Dimon, CEO of JP Morgan for example, once again this week voiced his opinion that Bitcoin is doomed. He has, however, been saying the same thing for several years, and with each passing month and each creeping bit of acceptance (such as the European Court decision) those who continue to repeat this opinion are looking less and less likely to be right.
Wall Street, the media and independent minded individuals rarely see eye to eye or move in the same direction, but when they do they form an incredibly powerful movement. The evidence this week suggests, or maybe rather confirms, that that is what we are seeing right before our eyes and the price increases are a response to that as much as anything. If that is the case, then we could well be in the midst of a time that changes everything for Bitcoin.