2017 — The Year of the Bitcoin!
Bitcoin — the crypto-currency coin created in 2009 by the mysterious Satoshi Nakamoto is today the most searched word in Google and worth more than New Zealand’s GDP, Boeing or the influential Goldman Sachs.
Nine years after its creation, it has turned into a household name. New bitcoin millionaires are budding every day with the price surging from $0.003 a piece in March 2010 to $20,000 in December 2017. If you had bought $90 bitcoins in March 2010 and still owned it, any idea how much you would be worth today? $600 Million! It has made the Dutch tulip mania of the 1600’s or the dot-com bubble of the 90’s seem like kids play.
With its meteoric, unbelievable rise begs the questions, so, What is bitcoin? Is it a commodity, an asset, currency? Can it replace gold or will it be adopted by banks and countries? How is it valued? I will share my take later on the blog but let’s first delve a little into bitcoin’s history.
A brief history of the bitcoin: In August 2008, the domain name bitcoin.org was quietly registered online. Two months later, a paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was passed around a cryptography mailing list. This was the first time Satoshi Nakamoto’s name was mentioned. On January 3, 2009, 30,000 lines of code spell out the beginning of Bitcoin. Bitcoin is limited to only 21M coins which is why it is often compared to limited natural resources such as gold.
Satoshi Nakamoto, the founder. Almost 300B market cap and no one knows who the founder is? Seems absurd and unbelievable in the connected world we live in. Some report says he is Japanese American, some just Japanese while others American, British, Australian — the list continues.
April 23, 2011, Nakamoto sent Bitcoin Core developer Mike Hearn a brief email. “I’ve moved on to other things,” he said, referring to the Bitcoin project. The future of Bitcoin, he wrote, was “in good hands.” In his wake, Nakamoto left behind a vast collection of writings, a premise on the workings of Bitcoin, and the most influential cryptocurrency ever created.
My take: I invested in bitcoin this year and still have some investments in bitcoin, but do I believe in it as to be the ultimate currency that replaces centralized currency(paper money), be adopted by banks or replace gold? NO!
Reason: It is too volatile and can’t be valued. The transaction fee is too high. It is hard to scale (Visa can manage to successfully run 24000 transactions per second whereas bitcoin, only 3.3/second). So, why is the world running crazy about bitcoin? The simple answer, most investors don’t know what it even is and is buying from fear of missing out, thus sky-rocketing the price. The reason it was once thought to change the world(being decentralized so governments could not control it) is not going to help it either. Governments want to control everything, and YES, they do control everything eventually! No government will allow its citizens use a form of currency which cannot be traced. Government interference and crackdown will be the ultimate nail in the bitcoin saga. But let’s look at the other reasons it will fail. To be used as a currency or commodity or asset, low transaction fees and scalability are as important as being stable. Like Netscape, AOL, Pets.com or Kozmo all of which started the dot-com boom and paved paths for new companies with the sensation called the ‘Internet’ just to later be extinct, bitcoin will be no different. Bitcoin will be making the path for newer coins that have; low fees, can be scaled and will be stable(so it can be used as currency, commodity or asset). I simply see no value in bitcoin! It solves no problem!
Future? While, bitcoin I feel has no future the technology behind it, ‘blockchain’, however, will change the world, revolutionizing; banking, cross-border payments and ultimately one day be accepted by a country or countries as their currency. Satoshi’s dream of a decentralized currency without government control has come a long way but is still a dream that has light years to leap before coming to fruition!
https://usa.visa.com/run-your-business/small-business-tools/retail.html
https://en.wikipedia.org/wiki/History_of_bitcoin
http://time.com/money/5048100/bitcoin-is-now-worth-more-than-new-zealands-economy/
