The Future of Bitcoin as a Cryptocurrency
What is the future of bitcoin?One expert answered this question by offering three possible scenarios: 1) A Bitcoin triumph – a scenario in which bitcoin replaces traditional fiat currencies and thus becomes the main unit of exchange. As a result, ‘people buy pizzas, finance their mortgages and pay their rent in bitcoin’. 2) Bitcoin achieves gold status – in this situation, fiat currency stays as the default unit of exchange in every jurisdiction – with the possible exception of a handful of extremely volatile and dysfunctional economies. Market capitalisation continues and bitcoin gains value over time, despite being subject to a few bubbles and slides along the way. 3) Bitcoin crashes – in this event bitcoin’s value against the dollar plummets and the currency loses its status as a viable method of payment.
Which cryptocurrency will turn out to be the best?When considering bitcoin as an investment, the answer clearly depends on the stance of the commentator. Some, like Berkshire Hathaway's Chairman and CEO Warren Buffett – presently rated the third-richest man on earth – may consider that (with bitcoin investments): “You aren’t investing when you do that. You’re speculating. There’s nothing wrong with it. If you wanna gamble somebody else will come along and pay more money tomorrow, that’s one kind of game. That is not investing.” Elsewhere, Fundstrat executives Tom Lee and Sam Doctor are reported to believe that a bitcoin return to $36,000 during 2019 is “realistic”. But thinking about cryptocurrency as a utility for the multi-asset age, Paul Puey of Edge Wallet believes that the viability of cryptocurrencies for both users and merchants actually lies in the ability to be able to ‘set up a wallet — while retaining control of the private keys — and accepting major cryptos including Monero and Ethereum in a matter of minutes.’
Will the Bitcoin price go much lower? And will it ever recover?Many financial institutions are somewhat reluctant to take a position on the market performance of cryptocurrencies. However, though reluctant to make an actual prediction, David Thomas, director and co-founder of the GlobalBlock digital asset brokerage harked back to bitcoin’s historical price behaviour during earlier market crashes of a similar nature, saying: “If we look at previous trends it takes on average around 67 weeks for bitcoin to recover and proceed to new all-time highs… If you follow this logic, then bitcoin would be heading towards US $20,000 in the second quarter of 2019.” However, Thomas adds a caveat that with a “bruised investor base after this year” he is not sure that the same thing will happen this time around. In the light of this, he therefore modified his likely expectation to say: “With positive news, ETFs and regulation, we believe bitcoin will recover to the US $8000 to $10000 levels during 2019 which given where it is today would on balance be a decent year.”
Is it safe to invest in Bitcoin?Given Warren Buffet’s reported comments, which explain why he thinks buying bitcoin is more like playing in your favourite online casino than purchasing an investment, it would be sensible to think carefully before treating a highly speculative bitcoin purchase exactly like any other mainstream financial investment.