If you purchased bitcoin one year ago today (08-17-2017) at $570, you would have seen a 700% rise. As of this writing on Thursday, August 17, 2017, one bitcoin is worth $4,500. See the Bitcoin Price Ticker Widget below for the price as of the time you are reading this. If you are reading the email version of this e-brief, you may want to click here to see the live version. When you look at the ticker, the price may be $1,000 or more higher or lower than $4,500 due to the volatility of the digital currency. Despite the volatility, I remain bullish, and the purpose of this short post is to offer my perspective.
Bitcoin has often been associated with drug dealings and other nefarious activities where anonymity is important. Some pundits believe Bitcoin may fizzle, although they like the Blockchain technology which provides the underlying infrastructure for Bitcoin and other crypto currencies. I am bullish on blockchain also. IBM and others are helping major industries revamp their antiquated infrastructure using blockchain technology. It will revolutionize how information is managed. Hopefully, we will have Internet voting using the technology as I wrote in Election Attitude – How Internet Voting Leads to a Stronger Democracy.
Bitcoin may play a major role in how money moves around. The price of Bitcoin has been rising explosively of late. I believe there are a number of reasons. The first reason is technical and has to do with the thousands of servers around the world which keep track of the Bitcoin ledger on the blockchain. There has been a debate among the operators of the servers (called miners) about how bitcoin transactions should be handled. What emerged from the debate is called a “fork”, meaning a second kind of cryptocurrency, called bitcoin cash, would be created. Many were worried the forking would result in the collapse of bitcoin. As it turns out, the fork was successful, bitcoin continues to trade, there have been no technical problems as feared, and it now seems clear cryptocurrencies will thrive. I believe bitcoin, at least for now, will be the dominant digital currency.
The second reason for the rise has to do with Ethereum, a public blockchain platform which offers another alternative to Bitcoin. The theory, unproven so far, is the rise of a potentially improved digital currency with Ethereum will add to the legitimacy of Bitcoin. I agree with that and further believe there will be many digital currencies.
A third reason is the global factor. Bitcoin trades 24/7/365 everywhere in the world. The total value of all outstanding Bitcoin is now $67 billion, a small part of the world economy, but growing and getting the attention of governments around the world. Initially a number of countries were very skeptical, and some banned bitcoin. That is changing. China, Russia, Japan, and others are looking at various regulatory schemes. This is good because it legitimizes the digital currency.
Like the early days of the Internet, Bitcoin is in the very early stage of development. Blockchain, as discussed in a number of posts here looks like a sure thing. Bitcoin is less certain, but I believe the non-U.S. consumer world will welcome the digital currency. Stay tuned. Experts have different opinions about the rapid rise. The bears see the value of bitcoin plunging. To me, it looks like the Internet of 1995. I first started writing about bitcoin in early January 2014 and have posted 41 stories. If you would like to browse through them, click here.
