What will be Bitcoin's role in Finance in the future? Fintech anyone? October 2017
True to style, Bitcoin has once again appreciated considerably since our last column. Whilst its value hovered around S$5,700 previously, it now sits quite comfortably at over S$ 7,500. In fact, during the most recent run-up, it even nudged S$8,000. However, this was followed by a bout of profit-talking, which is of course to be expected, given the impressive value added.
We've also learned that China is no longer Bitcoin's Sword of Damocles. To be sure, the ICO shoe did eventually drop, followed soon afterwards by the roll-out of restrictive regulations aimed at exchanges. But after some initial slippage, Bitcoin's value recovered fairly quickly. And then some.
Now, one thing we know is that today's Bitcoin is not the Bitcoin of the future. Clearly, where Bitcoin is now, and where Bitcoin will be in the mid-term to long-term, are two different things.
Although on the way to mainstream, at the moment only the knowledgeable and the relatively well off are putting their money to work with Bitcoin. But it's pretty plain to see that, eventually, Bitcoin will be the money of choice for a huge segment of the world's population, perhaps on a par with those that are now connected to the internet vis-a-vis those that are not.
Bitcoin's gradual spread into the mainstream has major implications for the Financial Industry in particular. Finance has the most to lose, because it's is likely to be the subject of massive disruption, courtesy of Bitcoin. This explains why the bigger established players instinctively denounce Bitcoin. To them, Bitcoin is an existential threat.
But it's time to surge ahead. Let's face it, with the 24-hour economy common-place in most major cities, how acceptable is it to have to wait for office hours in order te be able to trade shares? Should conflict break out on Friday evening in one of the world's major hot-spots, most regular investors are completely out of luck. They'll have to wait more than 48 hours before they can take appropriate action. Of course by then, those with connections have already safeguarded their investments, leaving the rest to hold the bag.
This seems completely ridiculous in a globally-connected, technologically-advanced world, especially given that this doesn't need to be the case. After all, Bitcoin can already be traded 7 days a week, 365 days a year. Bitcoin never sleeps. And with the genie now well and truly out of the bottle, it's just a matter of time before spending and receiving some Bitcoin becomes as common-place as sending and receiving an email.
That being said, there are still plenty of things to worry about when it comes to Bitcoin. Apart from its volatility and possibly some governments' heavy-handed regulation attempts, there are other threats. Will quantum computers come to pass? Will Google or Apple conceive of their own kind of Bitcoin, some kind of Bitcoin-slaying cryptocurrency? Will Bitcoin's ostensibly unhackable Blockchain protocol get hacked yet?
In addition to these concerns, Bitcoin, unlike cash or even credit cards or PayPal, is still confusing to use. In fact, generally speaking, the greatest obstacle to full acceptance of Bitcoin has been its relative lack of intuitive accessibility by the general public. Most still find Bitcoin on the "geeky" side. This will change of course, as user-friendly applications are continuously being produced by FinTech start-ups and other next-level app programmers. But this will take time.
Meanwhile, Bitcoin's market cap is tantalizingly close to 100 Billion. Most of this value has been acquired this year, 2017. Just for reference and nothing else, JPMorgan Chase's market cap is currently valued at $332 billion. Could Bitcoin eclipse JPMorgan Chase in 2019? If it does, it will be a memorable day, both for Bitcoin and for JPMorgan Chase, though for different reasons of course.
Either way, these are heady yet risky times for Bitcoin. For one thing, Bitcoin's heart and soul, its technology, is still being nudged, tweaked and perfected. But whilst Bitcoin's White-hat coders are working on perfecting Bitcoin, the combination of hype and technical complexity makes Bitcoin a tempting target for Black-hats and other scammers. Separating the wheat from the chaff is difficult for Bitcoin punters.
One thing is for sure, however: Whilst Bitcoin's legitimacy may be still be disputed, its emergence as a formidable asset cannot.
What Bitcoin has clearly shown is that technology can be used to create a currency that is at least as good as its predecessor, in some ways better. How? Bitcoin isn't issued by any central authority, central bank, government or otherwise. This renders Bitcoin theoretically resistant to interference or manipulation.
Bitcoin is also immune to counterfeiting. It cannot be copied, at least not without huge cost, the kind of cost that makes counterfeiting utterly prohibitive.
And unlike fiat money, which is being watered down relentlessly by its issuers pretty much everywhere, Bitcoin's supply is capped at 21 million. There will never be more than 21 million Bitcoin in circulation. This is why Bitcoin is also known as Gold 2.0. It's rare to the point of finite. And as such, in addition to being a currency, it's a very suitable store of value.
So yes, now there's choice. And it's the world's forward-looking millennials, in particular, that are exercising that choice.
Bottom line: Bitcoin offers realistic chance that it does spectacularly well, with a non-negligible chance that it crashes completely. For those willing to take that chance, it could be life-changing.
I wrote the above article myself and it expresses my own personal opinions and views on Bitcoin. I am unable to guarantee that the information and/or results will be correct. Furthermore, whilst I own some cryptocurrencies, I do not receive compensation for my writing and I have no business relationship with any of the companies mentioned in above article. In addition, I am not an investment advisor and above article is for purely informational purposes. Investors are advised to personally undertake adequate due diligence, or to consult a financial advisor in order to determine what assets - if any - are appropriate to invest in.
Bryan, a Singapore PR, has spent two separate stints in Singapore, spanning close to two decades. As is the case for most non-techies, although Bryan's first exposure to Bitcoin was around 2010, it wasn't love at first sight. However, Bitcoin's impressive resilience, meteoric rise and world-changing potential have converted Bryan, to the extent that he has now pivoted to fully commit to Bitcoin.
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