Hitting superhero highs this week, the Bitcoin today sits around the $9,900 mark, following strong predictions just weeks ago that it would fly to $10,000 in a matter of weeks. Well, the prophecy has come to fruition and this morning it traded on the CEX exchange at $10,009. What’s the next step?

This week Finance Monthly asked industry experts about the predictions and got their take on the rising value of the golden crypto coin.

Nicholas Gregory, Founder and CEO, CommerceBlock:

Despite being slated by the likes of JP Morgan CEO Jamie Dimon as a “fraud”, bitcoin bulls have been rewarded for their faith in the cryptocurrency during its stellar rise over the course of this year.

Bitcoin broke the psychological $10,000 barrier overnight and it is fear of a bubble which now drives most of the headlines. But what these articles never make clear is that this is largely irrelevant and some, including myself, would even prefer there to be a correction.

In fact, a correction is badly needed to prevent bitcoin from being the world’s first currency whose value bears no relation to real-world concerns including currency reserves, GDP, trade deficits and economic outlook. If Bitcoin becomes detached from fundamentals, price discovery will be impossible and widespread adoption a distant dream.

But there is one group of people for whom a bubble would make no difference whatsoever.

Savvy business owners are already hedging their positions to cover potential losses. Holding short positions is typical for businesses carrying out international trade in traditional currencies, and it’s no different for Bitcoin, Bitcoin Cash or other digital currencies.

This means that fears that market volatility poses a threat to developed economies are misplaced.

The ability to hedge positions and currency risk, already widely used in global markets, rose up in the face of dwindling cynicism about digital currencies in the international business community in 2017. As companies learned more about the real-world benefits of cheap, frictionless international transactions and the blockchain that underpins it all, the crypto industry has been quick to provide bitcoin futures contracts as a way of limiting risk, allowing firms to hold and transmit revenues in bitcoin without feeling over-exposed.

It is the currency speculators of various sizes currently making all the noise. They have monopolised world attention as bitcoin’s price swings have moved them in and out of the black. As in traditional FX markets, there will be as many losers as winners amongst them.

Slowly though, innovative business leaders are wresting the focus of bitcoin away from the speculators and quietly pushing forward the crypto revolution.

Governments have woken up to its growing use, threatening one of the final barriers to its mainstream adoption - tax.

The tax status of bitcoin and other digital currencies in the UK is currently up for review. As it stands, they are not viewed as currencies but as assets subject to capital gains tax.

This puts bitcoin and others at an unfair disadvantage because those holding crypto would have to pay tax if their currency increased in value. Any move by the government to clarify this status would fire the starting gun for companies still sat on the fence.

Critics and politicians need to acknowledge that there is a gulf between the speculators and companies making bitcoin a commercial reality. Only then will the question of damage to the UK economy go away and its potential finally be unleashed.

Joe Pindar, Director of Product Strategy, Gemalto:

With so many new cryptocurrencies being launched on almost a daily basis, there is no doubt that the demand is there, with Bitcoin the prime example. There is a good chance of Bitcoin reaching higher levels, but the truth is the cryptocurrency bubble is going to burst at some point. However like all bubbles, calling the exact time it will go pop is extremely hard.

It reminds me a lot of the dot-com bubble in 1999, which companies like Amazon and Google survived and became essential to our daily lives. Similarly with the convenience and international nature that Bitcoin provides, once the hype has been removed, we will be left with the serious players, and the true value will be established.

My advice is not to jump in head first, but don’t expect cryptocurrencies like Bitcoin just to be an overnight sensation.

Luke Massie, Founder and Managing Director, Vibe Tickets:

The world of cryptocurrency is completely unpredictable, but it’s also one of great potential. Bitcoin has seen a significant surge in the past 12 months, but it definitely hasn’t reached the pinnacle of its popularity. The usability, combined with the economics and technology behind Bitcoin has contributed to the incredible growth we’ve seen over the past year.

At the moment, less than 0.003% of the world’s population own a crypto wallet. With the predicted value of $10,000 by the year’s end, there’s no doubt in my mind that the usability combined with the ‘fear of missing out’ paradigm, the price will sky rocket past $50,000 per Bitcoin.

We’ll also see a rise in popularity across all cryptocurrencies, including Bitcoin’s smaller rival, Ether. Although market capitalisation has stabilised over the last six months, it’s very likely that the value will reach $500 in the very near future.

Although cryptocurrency is still perceived as digital gold rather than cash, it is the future. I expect to see all forms of it grow exponentially as more people catch on to its tangibility and value in the real world.

Eleesa Dadiani, Founder, Dadiani Syndicate:

The process of valuing assets in most cases is arbitrary. Whilst there are formulas and processes, in the end it boils down to the opinion of one. For instance, an accountant can view an asset one way, but if that asset happens to be a corporate institution, perhaps the CEO of that institution might have a completely different view of the value. As he has a very different vantage point as to where the company is headed and we see this throughout business all the time.

To look at it from a mathematic rather than behavioural perspective, I propose the following: if we consider the global money supply to be around 100trillion dollars, then I ask myself, could bitcoin achieve 1% of global transactions thus 1% of global money supply? I believe it could easily achieve this within the next 3-5 years at the current rate of growth, probably sooner. We are just at the tip of the iceberg.

It is important to remember the value of money is the value of money. For instance, A marketplace that is worth 10 million dollars, is worth 10 million dollars, so if bitcoin trades at one trillion dollars - 1% of global supply - then its market capitalisation or market is worth one trillion dollars. So now it’s just a question of doing the math.

Bitcoin is currently trading at approximately $10,000, and we know that there will only be a maximum of 21 million coins mined (some are lost in circulation, some cannot be accessed due to users losing keys). So, if we times $10,000 by 21 million, we end up with $210 billion as the current market capitalisation of bitcoin. Now in order to get to one trillion, the price of bitcoin would need to be approximately 4.76x what it is now. 4.76 times $210b is $1t which means bitcoin should be trading at a minimum of $48k – that is my opinion.

Theo Valich, Head of Growth, Datum:

All speculation about the viability of Bitcoin and other major cryptocurrencies are being validated by CME’s announcement of world’s first Cryptocurrency Futures exchange. The cryptocurrency market is primarily being driven by two factors: geopolitical situation and attractiveness to the new generations of consumers: millennials and post-millennials, i.e. Generation Y.

Rise of Bitcoin value is primarily being backed by the global political situation, such as recent turmoil in Catalonia, Zimbabwe or Venezuela. Politically unstable countries are looking more forward to invest in cryptocurrencies than gold or similar assets. Thus, a national cryptocurrency could act as affordable solution to the issuance of state-controlled currency.

On the top end, progressive countries such as UAE and Singapore are either introducing or evaluating government-backed cryptocurrencies such as emCash (Emirates) or Digital Dollar (Singapore). Temasek Holdings, AAA-rated sovereign wealth fund invested in Bitcoin in 2014. Thus, Singapore’s blockchain strategy is not reactive, but a result of multiple years of evaluation.

While speculating on the value of cryptocurrencies is attractive, there’s little doubt that Bitcoin is going to go far beyond $10,000. In fact, a valuation of $25-50,000 might be reached during 2018 (but not on a such fast pace as this year), and future multiplications, or “hard forks” with Bitcoin alternatives such as Bitcoin Cash, Bitcoin Gold or “Bitcoin Something” will continue to appear. If you purchased Bitcoin in July, today your portfolio has Bitcoin, Bitcoin Cash, Bitcoin Gold and Bitcoin Platinum. Thus, a single Bitcoin is already worth more than $10,000.

Cryptocurrencies enable monetary markets to put a value of previously vague, or undefined values. Conventional fiat currencies are not suited for example, to put a value on digital data streams. Thus, so-called coins and tokens such as Datum, Litecoin, Monero or Ripple represent the simplification of future currencies based on their use. You want to become a gold vault? Bitcoin. Become a global bank? Monero. Selling your own data? Datum.

Cryptocurrencies simply represent a new asset class, with the major attractiveness being in value understandable to the new generation of consumers and investors. Millennials and post-millennials want to put a value on their life, and content created.

Ethereum at $1,000 is a matter of months. The true effect of cryptocurrencies is the new value generated. If we really simplify cryptocurrencies to the bone, they are nothing else but “crowd owned” or “crowd issued” bonds / stocks / currency.

Kerim Derhalli, CEO and Founder, Invstr:

With hedge funds and investors continuing to pile in to the volatile cryptocurrency, it seems that it could be rise by hundreds, maybe thousands, of dollars in price yet before we see a slowdown. On the one hand, analysts are extremely skeptical of an asset class that gains this much value this quickly, but on the other hand, more and more private funds and investment groups are buying into digital currencies or providing their clients the option to trade them. With it being in finite supply, the exponential rise depends on how much investors are willing to spend, and when that breaking point is.

Much of the industry talk is that the price is giving Bitcoin a new legitimacy, with a market cap now exceeding some major companies across the world. This renewed awareness, along with greater access to it through trading platforms and new trading technology, has meant a surge in interest. However, as with any commodity, currency or other instrument, it remains a risk and there’s no denying Bitcoin’s volatile past. For now, many will just see the huge gains to be made by jumping on the bandwagon – early this year Bitcoin was at just $3,000. Many hedge funds are riding the tidal wave and we’ll see many more joining in the coming months.

Even if this is a major bubble is set to burst, BTC is still considered a legitimate investment vehicle for the time being, especially as it is now being embraced and institutionalized by major banks and exchanges. It’s certainly an exciting area to invest in, but vigilant investors should take a step back and look to it as part of a broad, diversified portfolio.

We would also love to hear Your Thoughts on this, so feel free to comment below and tell us what you think!

In recent weeks the mainstream media has gone Bitcoin crazy, with articles and segments, raising the profile of cryptocurrencies generally and Bitcoin more specifically in the popular consciousness. This is in part because of recent price rises that briefly took the price to more than US$5,000

per BTC. The question is, is now a good time to buy?

Before embarking on an answer, it is worth outing myself. I have been a Bitcoin investor for almost two years, so I have had the chance to bank some of those 1,000% gains. As you might imagine, I’m a fan.

However, on 1st August, Bitcoin changed in nature and to my amateur investor eyes, it seems that the risk profile has altered dramatically as well.

After more than three years of discussion (read: hostile arguments) online about the way forward for Bitcoin, a change in the code was enacted on 1st August. This is called a hard fork – owing to the fact that the underlying blockchain was split into two. This created a new coin called Bitcoin Cash.

Those arguments, which were quite ugly in places, related to the size of each block in the chain. Being data files, smaller blocks can contain less data than larger blocks. To you and I, that means that less transactions can be processed in smaller blocks. If Bitcoin is to really grow and scale, the argument is that it needs to be capable of handling many more transactions per second than was the case. One side of the debate wanted bigger blocks and more transactions, whilst the other side wanted new software projects that occur “off chain” with the current block size to remain fixed.

The arguments pre-fork were that smaller blocks would make Bitcoin slow and transactions more expensive, while bigger blocks would make the system fast and transactions would be cheap. After a little over one month, the evidence seems to suggest that is likely to be what is actually happening, but it is really too soon to know for sure. Faced with two coins, one that enables transactions within minutes and costs a few cents and another that is many multiples more expensive and takes an unknown amount of time, perhaps more than an hour to complete a transaction, there are many people that believe that most consumers and merchants are likely to opt for low costs and fast processing.

Will Supply And Demand Be Impacted?

These changes come at an important time for Bitcoin’s acceptance. The Japanese government has recently introduced rules to make Bitcoin legal and this year it is being rolled out across bus and railway stations nationwide, plus major shopping chains and into society at large. This, along with many other positive steps suggests that demand is going to continue to head upwards. However, the split of 1^st August will have an impact on the supply side of the new Bitcoin Cash.

Anyone with Bitcoin on 1^st August was able to “split” their coins and create an exactly equal number of Bitcoin Cash. The new Bitcoin Cash uses the same coin creation and halving schedule as the original Bitcoin, meaning that there is a fixed limit of 21 million coins to be created. In contrast to Bitcoin though, there are likely to be a great many people that were not following the debate closely and will not create their additional coins. Who knows how many this may be in total? The reality though is that when added to the number of the original Bitcoin that has already been lost or burned over the years, total lifetime supply is likely to be much lower than 21 million coins. If Bitcoin Cash catches on, this will likely be a future driver of price.

Opinions on the fork differ widely. Finance Monthly spoke to Ofir Beigel, founder of the popular website 99Bitcoins.com. When asked how he viewed the split he told us, “I consider Bcash to be just another altcoin - I'm saying this mainly from a market perspective. The market has spoken in the sense that Bitcoin's adoption and usage weren't hindered by the fork and the emergence of Bcash. Personally I think the results of this fork were a huge vote of confidence for Bitcoin, its maturity and stability.”

How Decentralised Is Bitcoin, Really?

One fear for Bitcoin is that it is not as decentralised as people might think. Yes, there are miners and nodes (processing the blocks) around the world. Yes, coins are owned by funds, companies, investors and traders. Yes, businesses globally are now accepting payments. And on and on. However, because of the nature of its formation, much like modern society, there is a disproportionate amount of power in the hands of a small number of guys (Bitcoin’s early adopters were overwhelmingly male). They came to be known as Bitcoin Barons.

Most of those early adopters bought - and still own – large numbers of coins. This has made them very, very wealthy. Some have used parts of that wealth to launch their own crypto start-ups, invest in other start-ups and coins, launch their own currencies and generally be very involved in the growth of cryptocurrency. This means that this relatively small group of developers and technologists are typically involved in more than one part of the ecosystem and many of them know each other. In other words, they have influence.

How Annoyed is Everyone, Really?

The arguments of the last few years have been very personal and many people have taken offence. Whilst they were all stuck in the same boat supporting one Bitcoin, the arguments could rage, insults be hurled and the show went on. Now that there is a second coin, that is no longer guaranteed.

Ultimately, both Bitcoins are incredibly similar, which means that if a person or business was capable enough to develop something useful for one, it can be applied to the other very easily. In some cases, such as mining, automatic scripts enable switching between the two at a moment’s notice.

Will Both Survive?

This is the crux of the problem. Do all those heavily invested technologists need to support the original Bitcoin when they now have their own Bitcoin Cash to support and grow? The answer is clearly no and the situation is not helped by the previous and ongoing animosity.

Earlier in 2017 consensus formed the New York Agreement when most of the major players agreed to provide support until November, but there is no guarantee that this will be upheld. For all their confidence over the last three years, the developers arguing for small blocks seem to be quite vulnerable. Either or both of heavy selling by the early investors – who we might think of as whales – or removal of services by businesses within the ecosystem could cause major dislocations in the market.

It is not easy to image Bitcoin in a death spiral, it is very likely to survive long into the future. The risk is that the chain does become slow and clogged, transaction times and fees do increase and it becomes less and less usable, with the faster, cheaper and directly comparable Bitcoin Cash available in the market. If that happens and the technologists remove support or sell their coins, the old chain and those amazing prices could be in grave danger.

It is clearly in nobody’s best interests to crash Bitcoin. That would set the cryptocurrency space back several years. Removing support, selling holdings over time and letting the market decide is a different matter though. For both Bitcoin and Bitcoin Cash the next few months will be make or break.

About the author:

Stuart Langridge is originally from the UK and has lived in Malta for 6 years. He has worked as a freelance writer on a wide range of economic and financial topics for many years and now works in marketing for an online gaming company.

The Bitcoin (BTC), the first and original cryptocurrency worldwide, has been very volatile and seen incredible ups, with some downs, over the past few years. Last week saw its value fall once again, following days of gains, and after recently splitting to Bitcoin and Bitcoin Cash (BCC). Nonetheless, 1 Bitcoin is equal to approximately $3907.82 at time of publication.

It’s also not the only cryptocurrency, with many others following suit and gaining traction. What keeps it together and functioning without a central bank is the blockchain.

In light of the popular rise of this type of currency and its systems, and now the unexpected coin split, Finance Monthly has heard from several sources around the globe on the latest Bitcoin opinion and analysis.

Richard Tall, Partner and National Head of Financial Services, DWF:

The surge in the price of Bitcoin began with its recent SegWit upgrade, a technical update which has made transactions of the cryptocurrency more efficient than ever before.

Since then, the upswing in the price of Bitcoin has received much attention, with many commentators speculating that its value could even climb as high as $5,000. And as Bitcoin’s price continues to hike on a daily basis, more and more people are looking to invest their hard-earned cash in the cryptocurrency, for fear of missing out on a big pay-off.

It is also interesting to note that there is strong demand in South Korea and the Far East for Bitcoin. With unrest taking place across both of these regions, it may be that some are buying Bitcoin as a convenient and safe place to protect their wealth – just like when people turned to gold during times of conflict – which may also be contributing to this recent surge in price.

Historically Bitcoin has suffered significant swings in value and while its pricing is impossible to predict, it may take little more than investor sentiment to reverse recent gains.

Dominic Williams, President and Chief Scientist, Dfinity:

The Bitcoin community was divided even before news broke that it would be splitting in two. There is a possibility we will see major instability in both Bitcoin and Bitcoin Cash over the coming months. Whilst the former has recently seen its price soar, the latter has seen its price slump, and so if Bitcoin Cash were to gain momentum we could potentially see major swings between the two currencies. As per expectations the new currency did not significantly impact Bitcoin’s market capitalisation when it was released. We must keep in mind though that the very first block of the new currency was only mined two weeks ago.

Jakob Drzazga, Co-Founder, Brickblock:

Before the final acceptance of the segregated witness update, people thought that Bitcoin had hit a ceiling in terms of price growth potential, and now there is widespread relief within the community that something is being done about scalability. This relief, along with the new capabilities of the blockchain to process more transactions goes a long way to explaining the surge in Bitcoin’s value.

It’s likely we’ll see even more growth of this kind in the future as people find new and innovative ways to use the technology. For example, Blockstream Inc.’s plans to make the digital ledger which underpins cryptocurrency available via satellite signal is also likely to contribute to this growth.

Looking at Bitcoin price surges and dips in the past, the trend seems to be cyclical. A rapid rise in price, many new users buy Bitcoin, price reaches previously unimaginable heights, then people start taking profit and converting to USD / GBP, price comes down. Eventually new features cause another surge of interest and so the cycle repeats.

In light of this, optimism around growth should also be accompanied by caution. Even as Bitcoin gains momentum, it is still capable of market contractions like the one we saw on Tuesday, which saw more than $6 billion to evaporate from the cryptocurrency market cap in a matter of hours. Volatility is still a big concern for those looking to invest in cryptocurrency, and has led to mistrust, especially amongst some larger investors.

As the industry grows, it’s important that more sophisticated ways of managing volatility-related risks are developed in order to make the market more inclusive and attractive to those who favour more passive investments.

Jimmy Nguyen, Chief IP, Communications & Legal Officer, nChain:

Bitcoin’s significant price increase since the August 1 ‘hard fork’ demonstrates increased confidence now that uncertainty over the hard fork’s impact has come and gone without major incident. Investors are believing in the future of Bitcoin as not just a cryptocurrency, but also a technology system that can change the way businesses and consumers operate.

While ‘original’ Bitcoin’s dramatic price rise is getting much of the attention, it’s important to remember that the Bitcoin Cash chain has also survived. Bitcoin Cash presents a preferred choice for forces supporting unlimited block sizes and massive on-chain scaling. At nChain, we believe that is the path to Bitcoin’s true maximum value. Massive on-chain scaling is needed to enable countless technology functions which can, and should, be performed in a decentralised manner on the Bitcoin network. We should have a Bitcoin network that powers a faster Internet of Transactions, and enterprise-level capabilities for payments, data, communications, smart contracts, and many other functions.

Today, the technology is not yet advanced enough to accomplish this, but nChain is working on many innovations and intellectual property assets - such as scalability solutions, security improvements, and software development kits - needed to achieve that level of Bitcoin network growth worldwide. The Bitcoin token is the key to delivering transactions on the network, and the token’s value will increase as the transaction capability increases. While more than one Bitcoin chain can certainly co-exist, we believe the highest value proposition for the future will be on a chain like Bitcoin Cash that supports much bigger blocks, lower transaction fees, and more exponential growth.

Jordan Hiscott, Chief Trader, ayondo markets:

The success of Bitcoin and other blockchain currencies this year has certainly been impressive. When Bitcoin initially began nine years it was only found in the dark corners of the internet, whereas it’s now becoming almost a mainstream financial asset.

The spilt from Bitcoin to Bitcoin Cash in the form of a SegWit hard fork could have been a catalyst for derailing the impressive upward momentum in price and general popularity of Bitcoin, but so far we haven’t seen this. I would call Bitcoin the ‘poster boy’ for successful cryptocurrencies – it’s established, secure to a certain degree, has a huge mining community, a large amount of speculation traders and its price has increased at an exponential rate every year. To me, it’s no surprise that since the hard fork, its price has increased from $2,700 to an all-time high of $4,449.

Interestingly, the spin off to Bitcoin Cash has hugely underperformed at the same time, initially increasing to $600 on the day of the spilt to now trading at $300. In my view this abundantly shows the importance in having a secure blockchain, and support of the mining community, in relation to how the transactions and sizes were recorded. At this stage it would seem this is still yet to happen with Bitcoin Cash.

However, I do believe that the price of Bitcoin has been kept artificially low in the run up to SegWit and now that the fork has happened, without significant issue, its popularity in general will greatly increase. Bitcoin represents a technology that has a finite amount, and also importantly is in a digital form, so unlike fiat currencies it is not affected by central banks printing more money. It is this aspect which I believe will drive its popularity to the next level.

David Parsons, CTO, TrustMe™:

It’s clear the recent price surges in Bitcoin and Bitcoin Cash are composed of three distinct principal drivers. The first one involves demand generation coming from new speculators entering the market driven by media reports. In the case of bitcoin cash, new and old speculators are looking to reproduce their gains as they did when bitcoins where in the low hundreds. The second driver involves the hording of bitcoins as an appreciating store of value, as bitcoin goes up the supply further contracts thus correspondingly driving the price further up.

Lastly, the third driver and the most controversial one in my opinion signals the market’s realisation of BCC and BTC as the start of something that represents fundamental change to banks and financial institutions operations. Today, our economy relies on the ability of banks and other financial institutions to create currency out of thin air. When home mortgages or loans are issued by current financial institutions the physical currencies do not exits and never did. This enabled banks to dispense with the need of ever physically obtaining the actual currency being given out. BCC and BTC can be thought of as physical currencies that must be given and received. This is what’s driving the price surges, the realisation the current financial institutions will be forced to physically obtain the currencies to conduct business that they normally perform.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!