Bitcoin as an alternative neo-asset class, does not command as much attention as it should from mainstream investors. Bitcoin is one of those opportunities that don’t come too often,a great proxy investment at one of the greatest innovations of our age. Over the next 4 years, I expect the price of this digital asset will take off to at least $4,500 and go on a series of cycles to unprecedented highs.
Tuur Demeester has put out some projections on possible price levels for a variety of use cases
As a full time Bitcoin market analyst, I have watched Bitcoin evolve over the past 4 years, (i came across Bitcoin by chance in 2011 on a podcast show on virtual reality economies). I track the progress of both price and fundamentals.
As an asset class, it has 2 things going for it.
Bitcoin is a world class censorship resistant digital asset with a supply cap
Through sensationalist media, the world has witnessed the consequences of governments gone bust, when everything but the kitchen sink are bandied about to cover up for loose monetary and fiscal policies .
Cypriot banks depositors know this too well, in March 2013 the state considered tapping deposits as part of a bailout deal by the EU and IMF. A one-time tax of 9.9% tax was to be levied on Cypriot deposits of more than €100,000, according to CNN.
“As Cypriots heard the news of the tax, they started lining up outside of ATMs to withdraw money.”
In July 2015, faced with the prospect of being locked out of the EU, Greece imposed a daily 60 euro limit on cash withdrawals from ATMs and strict prohibitions on money transfers abroad. Banks were shut down for a week. Reuters reported
“the lines forming at petrol stations and in front of the shrinking number of bank machines that still contained cash highlighted the scale of the disaster facing Greeks”
In both events Bitcoin’s price popped 350% and 32 % respectively. November 2015’s impressive run up to $504, was partly fueled by speculation on the Chinese escaping capital controls and Yuan devaluation fears. Bitcoin came in at 11th spot on Financial Times’ capital control evasion methods in China.
The unfortunate truth is, customer electronic funds held at a bank, and more generally centrally issued money/assets are subject to the whims of the state. At any time, a state mandate, bank collapse, or central bank imposed ban can render them inaccessible. It is not exclusive to the developed world, as Ugandans most recent encounter with mobile money censorship proves. For almost 3 days, their electronic money was rendered inaccessible. Naturally, their reaction was typical of the creatures that we are, human beings, exactly like the Cypriots and Greeks. According to the Consultative Group for Assisting the Poor,
“Perhaps the biggest impact is that the customer base may have lost faith in a system that can be turned off and on at the whim of the government regulator. The result of this distrust was visible for everyone, especially mobile network operators, as many users emptied out their mobile wallets as soon as platforms went live.”
2 worlds apart, yet, an uncanny resemblance in time of crisis.
As the world increasingly goes cashless, bail ins, negative interest policies and confiscation risks will only become more real for the average investor. Can you trust the bank to give you your money on demand? Bitcoin becomes a real alternative for investors and the common (wo)man..
Bitcoin is an economic incentive for securing the permissionless Blockchain
The most secure permissionless Blockchain out there, with the largest network effect to date, is the Bitcoin Blockchain. A honey badger for the most brilliant minds in the tech space – cryptographers, venture capitalists, ex- wall street bankers, venerable financial services firms like PWC – a long list indeed. Developers are pooling around this open source next gen internet of money to build it out.
It is not easy getting a group of smart people to agree on how to fix problems, and bitcoin’s decentralized nature certainly does not not make it easy. Therefore, reports of bitcoin’s demise over a blocksize community debate are overblown, valid but overblown. The future is in tact.
Price is a function of speculation as well as increasing utility of the blockchain and market driven applications. When evaluating bitcoin, the major points above are fundamental to its future valuation and at the core of it is the blockchain. While there can be different flavours of blockchains, there can only be one permissionless decentralized blockchain, and every year it survives, Bitcoin proves it is the one.
Thus, when mega corporations use it for one of many applications, it is a big boost for the future of Bitcoin. Just this week, in Tokyo and Kawasaki Japan, Mizuho Bank, Ltd., Fujitsu Limited, and Fujitsu Laboratories Ltd. today announced they had jointly conducted an operational trial using blockchain technology to shorten the processing time for cross-border securities transactions, from the current three days to same-day settlement.
The island is brimming with stellar news of late. The executive branch is passing a bill to recognize bitcoin and virtual currencies as alternative payment methods, a treatment similar to fiat money.
Governments around the world have also provided preliminary structures and frameworks for the regulation of digital currency transactions, bolstering the emerging technology’s legitimacy, according to Grayscale Investments LLC, sponsor of the Bitcoin Investment Trust.
The Digital Currency firm just published a brief report titled Diversify Your Portfolio with an Allocation to Bitcoin. It is a decent appraisal of a neo- asset class that is trying to grow in legitimacy, a great leap into the future as it is now mentioned alongside mainstream ‘Portfolio Theory’ and ‘Modern Portfolio Theory’. Bitcoin is becoming cool in financial circles.
“Remember that we’re still in the early days of this asset’s life cycle But, potential upside of positive performance for BTC is tremendous”
I have little doubt bitcoin will attain the lofty valuations that seem ridiculous now. It already went up from under 50 cents to $1163, so there is no disputing it can do it again. This chart of Berkshire’ Hathaway’s share price from $14.86 to $208,475 is a great example of what to expect when BTC resumes its bullish cycle.