This is the bold forecast by the CEO of the deVere Group, Nigel Green.
Over the last 48 hours, the three biggest digital currencies Bitcoin, Ethereum and XRP have climbed 4%, 12%, and 3%, respectively.
Mr Green comments: “The bearish sentiment of the last quarter of 2018 is now, I believe, behind us.
“We can expect the current upswing to continue, albeit with peaks and troughs as in any financial market.”
He continues: “In 2019, the cryptocurrency market is set to radically evolve. We can expect considerable expansion of the sector largely due to inflows of institutional investors.
“Major corporations, financial institutions, governments and their agencies, prestigious universities, and household-name investing legends are all going to bring their institutional capital and institutional expertise to the crypto market.
“The direction of travel has already been on this path, but there is a growing sense that institutional investors are preparing to move off the sidelines in 2019.”
Mr Green goes on to add: “The acceleration of institutional investment is likely to be driven by greater regulatory clarity.
“More and more global jurisdictions can be expected to join the likes of Malta, Hong Kong, Japan and Switzerland in becoming crypto-friendly from a regulatory and pro-business viewpoint.”
Whilst Bitcoin, the world’s largest cryptocurrency by market capitalisation, will remain dominant this year, Ethereum and XRP, due to their unique characteristics and problem-solving traits, can be expected to significantly fuel the 2019 upswing, affirms the deVere CEO.
He notes: “The smart contract abilities of Ethereum are already unrivalled. More and more institutional investors will be making use of these capabilities this year. Also, once Ethereum can accept outside data in its smart contract protocols, its price will rocket further.
“When it comes to XRP, hundreds of financial institutions across the world are already working with it and this is a trend that is set to continue and grow in 2019.
“In addition, XRP has been positioning itself to become a leading international facilitator of global remittances and inflows. This is a massive market in the expanding emerging economies.”
Nigel Green concludes: “2019 will be a year of accelerated maturation for the crypto sector due to institutional investment.”
(Source: deVere Group)
Bitcoin will lose 50% of its cryptocurrency market share to Ethereum within five years, states an influential tech expert and business analyst.
The comments from Ian Mcloed, from Thomas Crown Art, the world’s leading art-tech agency that he established with renowned art dealer, Stephen Howes, comes as Ethereum, the world’s second-largest cryptocurrency by market cap, began a price recovery on Friday after being hit hard with a major sell-off in recent weeks.
Bitcoin – the biggest digital currency – had also been in decline, but it bounced back quicker than its nearest competitor.
Indeed, Ethereum had crashed 85% overall this year.
However, Ethereum is regained ground late last week, jumping almost 14 per cent after its most recent plunge, only find itself trading again 10 per cent lower once more in the past 24 hours.
What is happening? And what does the future hold for Ethereum?
Mr Mcloed observes: “Turbulence is a regular, and sometimes welcome, feature of the crypto sector. Therefore, the Ethereum rebound was, and is, inevitable.
“But not only do we think it will rebound considerably before the end of 2018, I believe that over the longer time it will significantly dent Bitcoin’s dominance.
“In fact, I think we can expect Bitcoin to lose 50 per cent of its cryptocurrency market share to Ethereum, its nearest rival, within five years.”
Why is he so confident?
“Simply, Ethereum offers more uses and solutions than Bitcoin, and it’s backed with superior blockchain technology,” says Mr Mcloed.
“This is why we use Ethereum’s blockchain in our art business. It has allowed us to create a system to use artworks as a literal store of value; it becomes a cryptocurrency wallet.
“It also solves authenticity and provenance issues – essential in the world of art. All our works of art are logged on the Ethereum’s blockchain with a unique ‘smART’ contract.”
Last month, Stephen Howes explained: “Using this cutting-edge technology, the art world can eradicate one of its biggest and most expensive problems – forgery – and can protect artists, galleries, and private owners and collectors.”
Ian Mcloed concludes: “Whilst there will continue to be peaks and troughs in the wider cryptocurrency market, due to its inherent strong core values, Ethereum will steadily increase in value in the next few years and beyond.
“Unless Bitcoin does more now to tackle scalability issues, and improves the technology it runs on, we cannot see how it can catch up with Ethereum over the next five years or so, when the crypto market will be even more mainstream.
“Ethereum is already light years ahead of Bitcoin in everything but price – and this gap will become increasingly apparent as more and more investors jump into crypto.”
(Source: Thomas Crown Art)
Almost a decade in the making since the inception of Bitcoin and with a current market-cap hovering around half a trillion dollars USD, Bitcoin, cryptocurrency and blockchain have become common to the tech savvy, but face several challenges in becoming mainstream processes in the payments sphere. Below Alex Mihaljcic, VP of Product Development for Eterbank.com, talks Finance Monthly through the challenges and solutions ahead.
While most people don’t understand how they work, Bitcoin and cryptocurrency are not only hot topic buzzwords, but they’ve created thousands of multi-millionaires. Even so, the vast majority of people in the mainstream have no interest or intent to embrace Bitcoin and, as such, it still has veritably no bearing on everyday life as one still can’t even pay for a cup of coffee with any cryptocurrency.
In the last year alone, the cryptocurrency market cap has grown over ten-fold, and even taking into consideration “bubble-effects” of hype speculation, the fact remains that, since the inception of Bitcoin, the cryptocurrency market cap is following an exponential growth curve. Today this amounts today to over $150Bn, and various expert opinions estimate its future growth in the next 5-10 years to be in the trillions of dollars. With these kinds of numbers, it begs the question: With over $150 billon of cryptocurrency already in circulation, why can’t we yet pay for coffee or a slice pizza with crypto?
Not only this, but why is cryptocurrency languishing in a tech world of its own, far removed from adoption by the regular consumer or average business? And why does it exist only in a digital space, largely accessible only to the tech-wise cryptocurrency investors? Perhaps the most fundamental question that everyone is asking—from economic pundits to families around the kitchen table—is will crypto will ever become common currency to be used by the average person to pay for their groceries, bills or the hair dresser? Or are Bitcoin and Altcoins just a fad, doomed to remain ensconced in a cult-like tech realm?
While it’s clear that the only way for cryptocurrency to avoid falling into oblivion is by enabling its widespread adoption and acceptance as a “real” payment method, the reality is that the infrastructure and protocols have not been in place to foster this. In fact, there have been seemingly insurmountable obstacles faced by merchants across the board preventing them from accepting cryptocurrency as a viable form of payment.
Four of those key reasons include the following:
1. High volatility promotes fiscal vulnerability
Businesses are not cryptocurrency investors and, as such, they cannot be expected to accept risky payments that may lead to serious financial losses. Every business operates with supply costs, margins, etc. Therefore it would make little business sense to take on a risk of such magnitude by accepting crypto as payment for their goods and services. What if the local mechanic accepted Bitcoin for several large jobs and then Bitcoin value dropped 20%? This leaves these sort of business owners, whom have fixed overhead costs, in a vulnerable space where they take payments that fluctuate.
2. Technical know-how
Generally speaking, retail operators and cashiers cannot be expected to possess the technical expertise needed in order to safely process a cryptocurrency transaction. This is clearly one of the largest problems preventing mainstream adoption, since dealing with cryptocurrency transactions does require a determined level of technical expertise for which it would be absurd to expect a critical mass of front-line service staff to possess. The fact is that any new person coming across even a simple Bitcoin address can be overwhelmed by its perceived complexity.
3. Brand Confusion
The very word “crypto” suggests cryptic. Mix that in with all of the other various terms that are used including virtual currency, digital currency, alt coins, and Bitcoin, and it all creates confusion. It will be paramount for industry insiders to adopt consistent language to be consistently utilized in the mass market.
4. Uncertain regulatory environment
Regulations regarding cryptocurrencies are still not even close to being set in stone. As concerning, these same regulations actually discourage the use of such currencies in a B2C environment, regarding them as an “unnecessary risk” that may lead to legal problems for any business down the road.
Collectively, these four points above paint an ominous picture for the future of cryptocurrency. Not only relating to its progress and adoption, but also for its very survival in a very real scenario where an innovative payment technology fails to fulfil its potential. In fact, this isn’t the first technology to be introduced with the aim of creating a major cultural shift. Twenty-five years ago, fax communication was far more common and even preferred over email messages.
The Innovation Life Cycle Must Ensue
In all forms of innovation, there is always a lag between the advent of the actual innovation and the time that the average intended user starts to adopt and employ the technology. As the “technology adoption life cycle” has well established, in order for people to adopt and use a new innovation, technological abstraction layers are needed to hide all of the complexity of the core product and make it unequivocally user friendly. Of course, this takes time and innovation of its own until all the layers have been developed and refined around the core product, which is the main reason why there is always a lag between innovation and mass adoption.
The Game Changer: Crypto-to-Fiat Point-of Sale Solution
The tremendous amount of complexity associated with using Bitcoin and other cryptocurrencies in the real world financial marketplace, as exemplified by the four problems detailed above, has ushered in a new breed of leading-edge technology aimed at wholly solving the glut of mass market limitations. Emerging Point-of-Sale (POS) applications are finally permitting cryptocurrencies to be transacted as easy as a credit card payment, allowing small and large businesses alike to accept and instantly translate crypto into U.S. dollars, thus eradicating any risk and uncertainty. With this advancement, technical or crypto-specific know-how on the part of the consumer or the merchant is rendered unnecessary and businesses can readily convert crypto to real cash. Not only will this Point-of-Sale development quickly shift brand perceptions, but the regulatory environment will also eventually temper given the reduced volatility this POS technology proffers.
Once this business-friendly solution is adopted as a viable transaction method, enabling consumers to very easily spend their crypto currency and retailers to charge and settle crypto payments in the business’ preferred currency—whether dollars, euros or other, technical proficiency will no longer be barrier and volatility will subside since businesses will continue to deal strictly in Fiat currency (government-issued legal tender), resolving any possible crypto-specific regulatory issues that are rendered a non-concern.
Given its extrapolated impact, a POS innovation of this nature would be poised to unlock the full potential of the cryptocurrency industry and its utility in the real-world. A Crypto-to-Fiat business tailored POS solution will effectively allow for cryptocurrencies to penetrate the consumer market and truly disrupt day-to-day payments as we know them. The first business with a minimum viable product (MVP) will be to cryptocurrency transactions what AOL was to email.
Retailers today are accustomed to using Point-of-Sale terminals for processing credit card payments, and are increasingly adopting new solutions in the space such as Square’s retail POS smartphone app, replacing bulky hardware with Android and iOS devices. In order for merchants to accept and adopt a Crypto-to-Fiat POS solution, it must be tailored in a manner that seamlessly accommodates the retailers current understanding and knowledge base, with a near zero effort or learning curve required to adopt the new solution. At the same time, the innovation must demonstrate its ability to drive new value, new customers and, ultimately, new profits by expanding its ability to process transactions—and at a fraction of standard costs.
Such an end-to-end solution can truly catalyze cryptocurrency adoption, finally bringing Bitcoins and Altcoins to “Main Street” and crossing that crucial milestone for blockchain technology—and technology as a whole—to usher cryptocurrency into the modern world is a genuine, viable and enduring way.
RiskIQ, the global leader in digital threat management, recently released an infographic mapping and profiling the global cryptocurrency mining landscape, which has swelled in size due to the rush by companies and threat actors alike to capitalise on cryptocurrency's skyrocketing valuation.
The infographic is based on data collected by RiskIQ's web crawling infrastructure, which downloads and analyses website content to identify the individual technical components that load when rendered to detect cryptocurrency miners across the Internet. The research highlights the influx of revenue-generating miners in domains in the Alexa top-10,000 and analyses their attributes, such as prevalence, longevity and associated infrastructure.
Since these miners require an expensive amount of computing power — Fundstrat reported that the cost of mining a single Bitcoin reached about $8,038 and the costs of mining other coins are not far behind — actors often source it from unwitting users. To do so, they take advantage of the fact that security teams lack visibility into all the ways that they can be attacked externally and struggle to understand what belongs to their organisation, how it’s connected to the rest of their asset inventory and what potential vulnerabilities are exposed to compromise.
While some brands capitalise by running cryptocurrency mining scripts in the background of their sites to leverage the computers of their visitors legally, threat actors exploit this blind spot to hack vulnerable sites or spin up fake, illegitimate websites to siphon money, often with typosquatting domains and fraudulent branding. RiskIQ reported back in February that an upwards of 50,000 total websites have been observed using Coinhive in the past year–many of them likely without the original owner’s knowledge.
"In the case of cryptocurrency mining scripts, organisations must be able to inventory all the third-party code running on their web assets and be able to detect instances of threat actors leveraging their brand on illegitimate sites around the Internet,” said Adam Hunt, chief data scientist at RiskIQ. “Threat actors realise the lack of visibility these organisations have and are targeting it accordingly.”
The report found that threat actors leveraging domains or subdomains that belong, or appear to belong, to major brands, trick people into visiting their sites running cryptocurrency mining scripts to monetize their content.
(Source: RiskIQ)
With the growing expansion of cryptocurrencies and cryptomarkets, the prospects of regulation are on the horizon. But how will the economy of crypto change in turn? Finance Monthly gains top insight from expert David Sapper, COO at Blockbid.
In recent days, Ripple – one of the world’s biggest cryptocurrencies – has urged UK regulators to take control of the crypto market in the same way Japan have, to put an end to ‘wild west’ days of crypto regulation.
Ripple, amongst many others, are calling for more control in the space to ensure risks are minimized for consumers, whilst still allowing the asset class to innovate and grow.
There is little doubt that such calls will be answered – and that increased control will be introduced in the very near future. Just last month, Chancellor Philip Hammond announced a new taskforce, whose specific role was to safeguard crypto consumers. Whilst even more recently, the FCA announced that they will publish a review in to cryptocurrencies later this year which will ‘outline policy thinking on cryptocurrencies.’
Japan has, as of yet, been at the forefront of crypto regulation – and so provides a good indication of how we can expect it to play out in the UK. There are 3.5M crypto traders active in the country, and $97BN of Bitcoin was traded in 2017 alone1. Part of the reason regulation is so active and advanced in the country is a $500M crypto theft that took place early in 2018. This sparked a selection of sixteen cryptocurrency exchanges to form a self-regulatory organization to work towards developing standards for activities around ICOs.
The re-occurring issue with heightened regulation is the potential for suffocating innovation. ICOs and alt tokens have created a fresh and straight-forward means of raising capital for budding entrepreneurs to use when building their business ideas. Therefore, it is important that regulators practice walking the line between protecting consumers and potential investors, whilst not stifling innovative and creative prospects.
For example, a country that looks to be walking said line with good success is Australia. Already there have been very direct and positive moves with regards to crypto regulation in the country, some of which are already in place. All whilst managing not to stifle or suffocate the innovators at the centre. The biggest move so far is the introduction of the need to register with AUSTRAC before being allowed to function as a crypto exchange, something we at Blockbid successfully did earlier this month. Australia were also second only to Japan in accepting Bitcoin and other cryptocurrencies as legal tender.?
ICOs specifically require their own set of rules and guidelines. They are heavily regulated in the US and banned completely in China. Australia have set guidelines that depend on whether tokens are utility or security based. These guidelines are fairly strong, but allow companies to decide for themselves on which to go down, depending on the type of tokens they have produced.
Such an array of regulatory introductions are likely to have a real impact on companies working within the crypto-space, particularly for those that have been in action from the start, who will have to contend with rules that weren’t in place when they were starting out. However, for the most part responses from companies have been positive as the one thing everyone agrees on, is the protection of consumers is essential.
Precise details of how everything will work out remain unclear and will be revealed in time. Whilst the affects of regulation may appear as hurdles for those working in the crypto space, improved regulation will increase trust and engagement in crypto as a result. Therefore improved regulation is a step in the right direction not only for investors – but the companies behind cryptos as well.
1https://www.ccn.com/japan-leads-the-way-on-crypto-as-trading-soars/
One of the biggest trade crazes of 2017, Bitcoin and cryptoculture is a young profit-making hobby turned job for many. Now recognized as a serious business through the regulatory backing of governments and large corporations, it’s future is almost certainly one of continued proliferation, but what does its history look like? Below, Finance Monthly hears from trusted cryptocurrency expert, Fiona Cincotta, Senior Market Analyst at City Index, on the past 10 years of Bitcoin.
So far Bitcoin has only had a short life. However, the few years that it has been in existence have seen the currency go from almost unknown, to hitting the headlines on a daily basis.
Let’s take a look at a brief history of Bitcoin.
2008 – The Legend of Satoshi Nakamoto
Satoshi Nakamoto, or someone working under that alias, allegedly started the bitcoin concept, or so the legend goes. In 2008, Satoshi Nakamoto published a paper, which outlines the concept of the bitcoin. Most notably this paper addresses the problem of double spending, so as to avoid the currency being copied and spent twice. This was an essential foundation brick, that allowed Bitcoin to expand where other attempts at cryptocurrencies had failed.
This same year Bitcoin.org was born. The domain was registered through a site which permits its users to buy and register domain names anonymously.
If we think back to August 2008, it was just weeks before the collapse of Lehman Brothers and at a time when banks were notorious for behaving as they pleased. Bitcoin was intended as a decentralised alternative, controlled and monitored by market forces rather than banks and governments
2009 – Bitcoin becomes public
Bitcoin software is made available to the public for the first time. The first ever block is mined – it was called Genesis. Mining is the process by which new bitcoins can be created. The transactions are recorded and verified on the blockchain. The first ever Bitcoin transaction occurred between Satoshi and Hal Finney, a developer and cryptographic supporter.
By the end of 2009, the first bitcoin exchange rate is established and published. Bitcoin receives a value like a traditional currency. At this point $1 = 1309 Bitcoin
2010 – Bitcoin’s first real world transaction
As global economies continued to recover from the financial crash, the first real world Bitcoin transaction occurred, when a Florida programmer paid 10,000 bitcoins for 2 pizzas worth around $25. Later that year bitcoin was hacked, drawing attention to its principal weaknesses; security. Bitcoin had been trading at around $1, prior to the hack, which then sent the value through the floor. Further bad press this same year, which suggested it could be used to fund terrorist groups did little to increase its popularity.
2011 – Parity with the dollar
Bitcoin reaches parity with the dollar for the first time. By June of the same year each bitcoin was worth $31 each, which meant the total market cap reached $206 million. 25% of the projected total of 21 million bitcoins have now been mined. Encrypted currencies in general were starting to catch on around now and alternatives were appearing, such as Litecoin. Each virtual currency tries to improve on the original Bitcoin. Today there are around 1000 cryptocurrencies in circulation.
2013 – Security Issues; Price Crashes
June of this year saw a major theft of bitcoin take place, from a digital wallet - once again highlighting some of the cryptocurrency’s weaknesses. In the same year, another major security breech saw the value of bitcoin tumble from $17.50 to just $0.01. 2013 also saw the US Financial Crimes Enforcement Network issue the first bitcoin regulation. This would be the start of an ongoing debate as to how best regulate the virtual currency. Bitcoin’s market capitalisation had reached $1 billion.
2014 – Mt.Gox disappears along with 850,000 bitcoins
This year was characterised by growing understanding and desire to regulate bitcoin. Not surprising after the world’s largest bitcoin exchange Mt.Gox suddenly went offline and 850,000 bitcoins were never seen again. Whilst there is still no answer to what happened to those Bitcoins, valued at the time at $450 million, at today’s value those coins would be worth $4.4 billion. The same year US released the Bit License – proposed rules and guidelines for regulating virtual currencies. Microsoft begun accepting payment in Bitcoins.
2016 – Bitcoin boomed
Bitcoin saw an annual gain of 54%, outperforming all fiat currencies. This was the year that the bitcoin really started to establish itself and provided holders of the currency various ways to generate a return or indeed use the currency. It was seen as a safe haven from traditional assets in a year of Brexit, Trump winning Presidency, the continued rise of ISIS and the refugee crisis in Europe.
2017 – Legitimacy and $20,000
The value of bitcoin jumped from $997 to over $19,661 and its popularity has soared exponentially. The currency went mainstream as it became listed on two futures exchanges CBOE and CME. The listing of Bitcoin Future contracts on these exchanges has boosted the legitimacy of bitcoin and made it more widely available. Despite the futures contracts providing ability to short bitcoin, the value of the cryptocurrency hits an all time high.
Finance Monthly also recently heard from Fiona Cincotta, Senior Market Analyst at City Index, on the spread of cryptoculture and the passion for conversion among entrepreneurs globally.
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!
