guess who’s back again?
In a spectacular return to form, the world’s best-known digital currency, bitcoin, witnessed another exciting milestone for the crypto community when, on the 1st December, it achieved another all-time high of $19,911 per coin. Mind, having reached the previous high three years ago, it spectacularly crashed and lots of people lost their proverbial shirt. Understandably, the question is, is it going to do so again?
Throughout its evolution and growing acceptance, bitcoin has displayed this repeating pattern: It rallies hard and fast for about a year with its price multiplying several times over and creating a bit of a buying frenzy, before falling dramatically. However, each time it does so it characteristically remains several times higher than when the furore started. It’s too early to call in this particular cycle, and there will undoubtedly be some profit-taking from those who bought in the last high-times, but it appears the precedent is set for the future. The main thing we all have now to accept is that cryptocurrencies are here to stay and they will be a far more mainstream component of the world’s financial framework. During an interview on CNBC’s, Brian P. Brooks, Comptroller at the Office of the Comptroller of the Currency (whatever that actually is?), proclaimed that “nobody is going to ban bitcoin.”
With PayPal and Facebook already on-board the good ship crypto, Forbes reported last week that the partnership between Visa and Circle Internet Financial, which developed the dollar-backed stable-coin (USDC) crypto coin, will enable Visa send and receive payments using this crypto. In short, businesses will imminently (c.12 months) be able to send international USDC payments to any business supported by Visa, and after those funds are converted to the national currency, spend them anywhere that accepts Visa. This is ground-breaking.
Speaking of Facebook and its proposed Libra currency, the infamous early-adopting Winklevoss twins have entered the fray again, unequivocally stating they expect the price of Bitcoin to reach a value in excess of $500,000 within the next decade: “Our thesis is that Bitcoin will disrupt gold and will attain a market cap of $9 trillion. We think Bitcoin could price at $500,000 a bitcoin.” A slightly more cautious, Citibank predicts a price of only $318,000. Call me a gullible believer but, with a capped-supply of exactly 21 million coins, I anticipate this to be a no-brain-hedging against the inflation, and erosion of all almost every other asset-class, expected from the humungous amounts of QE we’ve just experienced. And will continue to experience.
However, for those more in the know, the milestone of note was allegedly that, only an hour after bitcoin’s peak, the #2 crypto, Ethereum, successfully launched its ‘Proof-of-Stake’ (PoS) blockchain, dynamically signalling its move from the previous Proof-of-Work (PoW). Yep, I know, it means precious little to me either, but apparently it forces those wishing to become ‘miners’ (participants who confirm transactions and produce new ‘blocks’ of coin to the ‘chain’) to ‘stake’ their Ethereum wealth to do so, and you have to stake a minimum of 32 ‘ethers’ or coins to be able to participate. By doing so, it is believed throughput will be increased by over 1000x, security will be significantly enhanced and the automatic need for high-powered and energy-intensive ‘rigs’ or supercomputers will be removed.
All sounds fine and dandy but just remember the value of your investment may fall, as well as rise. Or as one financial wag once explained “the value of your investment may rapidly fall, as well as merely fall…”
only a few survived.