At the close of 2017, eight years on from its original launch, Bitcoin’s future looks stronger than ever. Following years of stagnation, its value has skyrocketed more than 1,000 percent over the past 12 months, and has surged over $2,000 in just the last few days.
Though it’s a relatively new phenomenon, many claim to know what the future of Bitcoin holds. Despite that confidence, should it be invested in freely? Anyone who remembers the hype train of the dot com bubble will remember too well the dangers of investing in the next big thing.
Then again, many of today’s biggest technology giants were spawned in that era, and survived to become billion-dollar companies. Is Bitcoin, like Amazon or Google, on the leading edge of a revolution? Or is it, like Lycos and GeoCities, a good idea doomed by fundamental flaws?
Up, up, and away!
Some have theorized the launch of many new alternative currencies – which now number in the hundreds – have helped push up the value of Bitcoin and other more established currencies, like Ethereum. Ironically, the Initial Coin Offerings (ICO) of new currencies are often funded by existing coins. However, according to host of the Bitcoin News Show, Vortex, that’s only part of the picture.
“What’s happening now is reminiscent of the dot com bubble in 1998.”
“The ICO craze has died off in the past few months after bitcoin started ripping past $5,000 […] Since Ethereum and most ICOs have little fundamentals, the value would inevitably be driven back into Bitcoin, once people slowly realize how valuable Bitcoin really is.”
Ultimately, he said, the main reason for Bitcoin soaring in value throughout 2017 is a growing realization of the potential for cryptocurrencies, the age-old supply and demand, and a better understanding of the digital scarcity that is an intrinsic part of Bitcoin. The way it was designed means that one day, sometime in the next couple of decades, the last coin will be mined, leaving us with a global total of 21 million coins – if we ignore the many millions that are said to have been ‘lost’ over the years.
That factor alone could be the reason Bitcoin’s value has surged. The slowing rate of mined coins, and an understanding that new ones will eventually be unavailable, creates scarcity and adds a certain built-in value.
History repeats itself
The mixture of a distant, but impending end may help drive investment of Bitcoin, but it’s nothing new to business investment in general.
“It reminds me of the old internet days,” CEO and founder of CryptoBnB, Tariq Alwahedi, told DigitalTrends. “It was something exotic […] What’s happening now is reminiscent of the dot com bubble in 1998, when you saw a huge money flowing into the dot com companies. Yes, there was a bubble that happened, but let’s be frank, what’s happening in the industry today, is that many of those companies that formed during that time are shaping the online industry today.”
Alwahedi also drew comparison with booms and busts in the stock market, but he wasn’t sure we’d see a similar crash in Bitcoin’s future. Cryptocurrency has historically risen to new heights, only to crash down again — often severely — before making its way to new record values. He’s not sure that’s something we’ll see in this instance.
“I can’t say if it’s a bubble or not, but there is a huge rush towards it. The market is very bullish right now,” he said. “Corrections always can happen, but this is not hype any more. We think this is a fundamental change to the economy, and definitely this will set the scene for the future.”
Vortex, on the other hand, sees a correction in the currency as inevitable, but not something that will put much of a dent in its meteoric rise.
“Bitcoin’s been on a pretty visible stair step pattern for the second half of this year following a more long-term textbook parabolic trend. There will be pull-backs of course, but they are becoming increasingly short lived as the thousands fly by now, that we’ve surpassed the $10k price point. The dot com bubble at its height was in the trillions, and the crypto market cap is still only roughly $300 billion at the time of this writing. We’ve still got a long way to go.”
$15,000 today, $150,000 by 2020?
These two aren’t the only ones with serious confidence about Bitcoin’s (and other currencies’) potential for the future. During a Bitcoin’s most recent tear — itself an astounding spike following an unprecedented year of growth – we’ve seen incredible confidence from some interesting parties.
John McAfee, known to some as the founder of McAfee anti-virus, and to others as the man who dodged Belize authorities on a murder rap, believes that we could see a single Bitcoin be worth more than a million dollars by 2020. Hedge fund manager and venture capitalist James Altucher agreed with his sentiment, and expects Bitcoin to break seven figures by 2020.
Vortex was a little more conservative in his estimations of Bitcoin’s future, but he sees it as more a question of when Bitcoin will be worth these figures — not if.
“If we look at what Bitcoin is truly competing against, which is the gold market amongst many other industries, we can see that the market cap of that is in the trillions,” he said. “If Bitcoin is to fulfil its purpose of being both a store of value and a medium of exchange, it’s market cap must rise to something similar to that of gold, or the U.S. dollar. The limited supply combined with the upcoming halving in 2020 will see to Bitcoin in the six digits by 2021.”
For Alwahedi’s part of things, he preferred to suggest that it would grow no matter if corrections happen or not, but wouldn’t be drawn on speculations of true figures.
“Are we going to see [Bitcoin value hit] $30,000 [by next year]? I think it’s all possible,” he said. “Nobody would have expected a Bitcoin to move from $600 to $10,000 plus in 1.5 to two years, this is massive growth. Whatever correction will happen will not remain, and it will not drop drastically because the fundamentals are there […] it’s a matter of supply and demand.”
Don’t count out the little coins
Though Bitcoin is important, Alwahedi thinks the real potential with cryptocurrencies is in the alternatives, the so called, “alt-coins.” He means the likes of Dash, Ethereum, Bitcoin Cash, and other advanced cryptocurrencies that offer more than just a store of value and a transactional medium.
“Other blockchain currencies that are available, like Ethereum for example, offer a new layer of smart contracts that you can use, and can give you enhanced experiences as well,” he said. “It’s not only about cashless [or] about paying for transactions, but what else can you bring? Can you minimize friction? Can you make it more efficient? Can you make it truly smart?”
It’s fair to say that he would say that, considering CrypoBnB’s potential success would be built off the ability for its own cryptocurrency to find acceptance among the millions of cryptocurrency owners around the world. Yet while the jury might still be out on the potential for niche, industry-specific currencies like his own and DentaCoin, Alwahedi is committed to the idea of smartening up the global economy. In the future he envisions, our money will be able to do much more than just buy things for us, regardless of what currency or cryptocurrency we hold it in.
“Bitcoin is a fundamental change to the economy, and definitely this will set the scene for the future.”
“I see Ethereum as giving the first insight of smarter currencies than Bitcoin. Bitcoin opened the wide space […] but will it be a smart enough of a currency, or token as other currencies? I don’t know, [but] tomorrow’s money is smarter and will recognize its owner. More than just the financial influence that it has today.”
As for Vortex, he’s made his views to clear to Digital Trends in the past — Bitcoin trumps all.
“Let me be clear. After nine plus years of Bitcoin’s existence, there is absolutely no competition for its main value proposition of being the world’s censorship resistant, permissionless open and global store of value,” he said. Nay-sayers may claim its now too old-school, but he believes the latest and greatest isn’t always the most revolutionary.
“We only have one TCP/IP stack,” Vortex noted. “Google, Facebook and Amazon didn’t go out there and each build their own networking protocols, they simply built atop and improved the existing ones […] When everyone speaks the same protocol language, that’s where the emergent innovation can take place anywhere, and everywhere.”
Is it time to invest?
With many talking heads suggesting Bitcoin’s latest tear is the sign of an even brighter future, you might be looking to invest. It’s only natural to want to ride the wave when there seems to be so many people making so much money, with a comparatively small investment. It is important, however, to exercise caution, and make sure you know what you’re getting into.
“There is a lot of hype happening today, reminding me of the penny share stock market bubble, where people were creating companies and jumping on them because they are cheap and can make lots of money, develop in volume,” Alwahedi told Digital Trends. “Today my advice to everybody is you have to look at the fundamentals of the business itself.”
Fees and transaction issues must also be considered. Steam recently ended its acceptance of the cryptocurrency due to ballooning fees, and its volatile value, and hacks of Bitcoin-connected companies remain common. Unlike your bank account, which is protected by law to guarantee you don’t lose your cash to theft, Bitcoin provides no recourse.
Vortex, however, that pitfalls are to be expected, and balanced by cryptocurrencies’ unique ability to solve problems facing today’s investors. “Bitcoin is not Paypal 2.0, nor should it be looked at that way in the short term,” he said. “There’s only so many places people can store their wealth these days, where it cannot be seized by any government or corporation, and thus Bitcoin is becoming more attractive to the people by the day.”
Ultimately, he thinks we’ll all be using Bitcoin. “Like the internet, if you don’t have email or a website, the world has passed you buy. So too will be the case with Bitcoin.”