We’re back on the bitcoin rollercoaster

Last week the hotly anticipated bitcoin halving took place. As you probably know by now, this event happens around every four years and cuts the reward miners receive for each new coin they create in half. The halving took place without any incident, and bitcoin owners are hoping that they will see the same surge in price that followed the two previous halvings. It has to be said that this is unlikely to happen this month, and we may have to wait for 12 months to see the true effects.

BTC could hit $100,000

Some enthusiastic bitcoin supporters, namely the Winklevoss Twins, said, “We’re set for another order of magnitude step up — whether $20,000 is the bitcoin base, maybe we see $100,000.” As we know, big numbers for bitcoin have been a feature of the headlines for quite some time, but we would all be well advised to take a ‘let’s see’ approach to investing in it.

One thing we must keep a vigilant eye on is the mining community. A halving makes their work less profitable, and it could be that bitcoin would need to sit at the $10,000 mark for them to achieve a breakeven price. Inefficient miners are most at risk, and they may need to liquidate their rewards. This would flood the market with bitcoin, and that in turn could threaten the fortunes of more profitable miners due to a sudden growth in supply of the digital asset.

Billy Bambrough reported on 12th May in Forbes the view of Gavin Smith, chief executive of Hong Kong-based bitcoin and cryptocurrency exchange and hedge fund Panxora, who said, “The recent much-hyped halving, while largely psychological in impact, could create a catalyst drawing new players into the market and contributing to the rise in the value of bitcoin.” That sounds promising, and he added to that, saying bitcoin is at “the start of a multi-year bull phase” though there could be “a bumpy road ahead.”

A hedge against inflation?

There is other interesting activity to factor in, such as more investors using bitcoin as an inflation hedge to protect their assets against currency devaluation. This has been fuelled by the US Federal Reserve pumping trillions into the economy to alleviate the effects of the lockdown. It isn’t the only government to have taken this step, and there is concern that these massive injections may lead to over inflation, as well as out-of-control debt.

Jean-Marie Mognetti, chief executive of digital asset manager CoinShares, commented: “In a world where investors continue to seek protection for their portfolios against the world’s central banks’ behavior, bitcoin, a digital currency whose supply is programmatically defined to reduce until it reaches its maximum supply, would seem to be the perfect hedge for any institutional investor portfolio.”

There is a belief that if bitcoin becomes a safe-haven asset and a hedge against inflation, then its price will head for the Moon over the next couple of years, and we will see that December 2017 price of $20,000. Perhaps $100,000 isn’t so pie in the sky after all.

Who Will Kill Bitcoin?

We are apparently living in an unprecedented time, although of course we aren’t; there have been plagues before this one. The only difference is that we are living through this is in an age of technology.

We know who the global tech giants are:They are Google, Facebook and Apple, and they all need to build their revenue. Amazon is excluded from the list, because it has already seen a massive growth in traffic and purchases, as consumers confined to their homes need to have stuff delivered.

 

One way in which the three tech giants could pursue rapid growth is by entering the financial services sector, something they have dipped their toes into, but have never embraced wholeheartedly. However, they face a challenge, and as Billy Bambrough, one of the expert cryptocurrency analysts I follow writes, while Google et al have been waiting around, “bitcoin has gained ground.”

What are Google and Facebook’s weak points?

 

As Bambrough says, these two companies have relied on ad revenue, but he believes that this is going to be squeezed hard by regulators in the post-virus world. In an earlier article, he wrote that the world will likely be looking for alternatives, and quotes the CEO of the blockchain-based privacy browser Brave, who believes Google “is going to be taken apart over coming years.”

Apple loses its grip

 

Apple has seen sales of its big money maker, the iPhone, decline. The reason being that less expensive phones have improved in quality, and improvements to the iPhone have not proved to be enough to really enthuse the consumer. Add to this the economic effects of the coming global recession and it is easy to see that those who might once have splashed out nearly $1000 on a new iPhne, may opt, indeed will have to opt, for cheaper models that effectively do the same job.

Google is apparently looking into launching a smart debit card, and Apple has already debuted a credit card, while Facebook is still moving ahead with its Libra stablecoin project that caused such a stir last year. It hoped to displace bitcoin as a leading cryptocurrency, but has clearly been foiled in its efforts.

 

Bitcoin offers stability

Meanwhile bitcoin, which has no tech company, government or central bank behind it lives on. And as Bambrough points out, it doesn’t even have an advertising budget, never mind a CEO. As he says, “Bitcoin, maintained by an evolving and decentralized network and beholden only to the mathematical principles that underpin it, is stability without authority.”

 

Google et al by contrast are deeply centralised, and so will any financial products they unleash on the market. They will never get away from that, whereas bitcoin continues to represent the antithesis of Silicon Valley capitalism. That’s why the big tech companies main option now is to kill it! But who will do it?

Is ‘The Simpsons’ ahead of the Bitcoin curve?

One of my colleagues recently shared an anecdote with me about ‘The Simpsons’. She told me that during a chat about politics, her son told her, “Well, it was on ‘The Simpsons’ and then it came true.” And then he asked her, “How do they do that?”

Indeed, how is it that the long-running animated series appears to be a more reliable source of future predictions than Nostradamus, or even the MSM? So, I was very interested when one of the writers I follow, Billy Bambrough, published an article at Forbes about the The Simpsons’ predictions for Bitcoin

It’s true that cryptocurrencies, and in particular Bitcoin, have been mentioned in a number of shows, perhaps most relevantly in ‘Silicon Valley’, as well as in The Big Bang Theory, but who might have expected that Luno, a major bitcoin and cryptocurrency exchange, would turner to the Simpson family’s past prediction to figure out when Bitcoin might go mainstream.

Bambrough refers us to an episode that aired on 23rd February, which I must admit I didn’t see. It featured Jim Parsons, who plays Sheldon Cooper in ‘The Big Bang Theory’, and in it, Bitcoin is described as ‘the cash of the future” and that this future is coming closer “each day.”

As Bambrough points out: “Over the show’s 30-year run The Simpsons have correctly predicted Donald Trump becoming U.S. president, the NSA spying scandal, Apple’s FaceTime, smartwatches, and the Disney takeover of Fox.”

Now, here is the interesting bit. The analysts at Luno have calculated that it takes an average of 15.6 years for a ‘Simpsons’ prediction to become reality. That means we’ll see mass adoption by 2036. Marcus Swanepoel, Luno’s chief executive, said, “It seems the creators behind The Simpsons have a knack for picking up on things that seem out-of-this-world, and a way of portraying the impossible as part of day-to-day life,” adding, “I wouldn’t be surprised if they’ve overshot their prediction slightly in this case.”

Indeed, the very fact that ‘The Simpsons’ are talking about crypto and Bitcoin on-screen may give adoption a very helpful nudge, because there is no doubt that public perception and awareness is one of the most important factors in digital assets going mainstream.

Perhaps we should all be keeping a closer eye on ‘The Simpsons’ — it’s obviously about so much more than eating doughnuts!

Who’s in the Forbes Blockchain Top 50?

The Forbes annual Blockchain 50 is on its second outing. It lists the companies making the biggest strides in blockchain, and most of them are valued in the billions of dollars. Indeed, to appear on the list, Forbes says, “To qualify, Blockchain 50 members must be generating no less than $1 billion in revenue annually or be valued at $1 billion or more.

There are some surprising names that turn up in the Blockchain 50, if only because on the face of it they have little to do with blockchain.

For example, De Beers is on the list. The diamond giant’s new software, Tracr, follows diamonds through the supply chain as they are mined, cut, polished and sold and tens of thousands of stones are being registered per month.

Foxconn makes the iPhone trade-finance venture, Chained Finance, pays more than 20 electronics suppliers using digital coins minted on the Ethereum blockchain. As a result the costs have dropped from annual percentage rates as high as 24% to a mere 10%.

Dole Foods is another blockchain adopter. It is using it across all vegetable processing, for millions of pounds of lettuce, spinach and coleslaw. Customers at Walmart can now check where their fruit comes from by scanning a code used by farmers. It is soon expanding this use of blockchain to its fruit.

LVMH, the luxury goods brand, is using blockchain technology for traceability and proof of authenticity. Among its brands, Louis Vuitton is already tracking millions of its products in an effort to reduce counterfeiting.

The United Nations, a 75-year-old organisation is using a number of blockchain initiatives, including one that is intended to combat warlords who steal aid using pilfered ID cards, the UN has over the past two years disbursed funds to 106,000 Syrian refugees in Jordan, using blockchain-verified iris scans instead of ID cards.

As Forbes says in its introduction to the Top 50, “Blockchain started as a way to move bitcoin from point A to point B, but it is now being used by a host of big companies to monitor and move any number of assets around the world as easily as sending an email.”

From the instantaneous settlement of German government bonds to verifying the provenance of diamonds mined in Africa and bringing liquidity to a small supplier of sliding shower doors in Zhongshan, China, this year’s members have largely moved beyond the theoretical benefits of blockchain, to generating very real revenues and cost savings.