2019: the year of bitcoin. probably…
As many of you will already be aware, the first commercial transaction with bitcoin took place in May 2010 when two large Papa John’s pizzas were bought for 10,000 bitcoin. Fast forward to December 2017, just thirteen months ago, when the price of one was a smidgen under $20,000 and this would have equated to, if my maths are correct, $200,000,000.00. Nice work if you can get it, Papa. Now, I tell you this not to dance on any speculator’s grave but to highlight the rollercoaster it has been for those cryptocurrency ‘believers’, and I count myself amongst their number. I also consider it high time to look back exactly ten years to when the first cryptocurrency, bitcoin, was created and to recall exactly why it was brought into existence.
Created, in the aftermath of the 2007/8 financial crash, the sole intent was not to invent another financial asset-class but exactly the opposite: to sidestep this iniquitous industry and place both a means-of-exchange and store of value directly in the hands of its community. Comprising a permanent, predetermined fixed amount of 21 million and sitting above a publically available distributed ledger (blockchain) the ‘currency’ could be no more egalitarian if it tried. At its launch on 3rd January 2009 the first block was etched with a superbly subversive statement: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” The intent was perfectly clear from the get-go and digital currencies would exist outside a system that had, with the notable exception of those guilty bankers, brokers, financiers and investment analysts, failed us all.
Over recent years, and following four well-documented previous massive surges and slumps, wild madcap forecasts, in both directions, have been made by the financial great and good: John McAfee (unpredictable at the best of times it has to be said!) has stated bitcoin will reach $500,000 by the end of 2020 and the Winklevoss twins believe bitcoin will ultimately peg gold, meaning a price in excess of $320,000 and a total market capitalisation of over $4tn. It should be noted that both have already made their fortunes following the most recent bitcoin boom and bust. On the counter side, Teunis Brosens of ING and international economist Nouriel Roubini reckon it will all but disappear into obscurity, the latter declaring that ‘bitcoin and its crypto copycats should be in a 2018 Sh*tcoin Hall of Infamy’. Striking the mid-ground is Stephen Innes of currency trading firm Onada, who believes, that following increased regulatory control, we are witnessing a slight upside which could result in a $6000 price.
Me? I’ve no more idea what’s going to happen to cryptocurrencies than I have as to how Brexit is going to pan out. However, for good or bad, I genuinely believe in its value (wholly unrelated to its price), its technology, its idealism and it is for these reasons that I’m sticking with it. I fully concede that cryptocurrencies still have some way to go to establish themselves as both a means-of-exchange (being able to buy/trade things) and as a stable store of value but I’m in for the long-term. Furthermore, there’s nothing more I would like to be able to give you than a strong, upbeat, optimistic view to welcome you back to the new year’s fray, but the bad news is evidence shows that every ten years (or so) a major financial crisis occurs, and, who’d a thunked it, it’s ten years since the last one…
