Archiv für Mai 2017

Bitcoin rally

Freitag, 26. Mai 2017

It’s really hard these day not to register the run of bitcoin versus other fiat currencies such as Euro or US Dollar. Almost every publication in the financial world has written a piece about the digital currency, which was invented roughly 8 years ago from an anonymous source. Me personally, I thought by the end of the year 2017 it would have reached $2000; in my best case scenario $2500. Both marks are already history and May isn’t over yet.

For a person who educates people about blockchain (or Distributed Ledger Technologies #DLT) for a living, I see it first hand how hard it is to grasp the idea, that a bunch of computers in a network, running the same software, provide a currency (or value exchange). Now add the fact, that this currency rises in value literally like a rocket and you have a wall of doubts. The wall consists of a lack of understanding, which I totally get. It took me a while to roughly understand what the heck is going on with those cryptos and I’m far from getting it 100%. On the other hand, I absolutely embrace the idea, that something new could put our financial world upside down for a greater good. Because nobody in his right mind can state, that the power of the banking industry isn’t hurting all of our daily lifes. Those banksters are crooks.

Bitcoin and its brothers and sisters give the power back to the people. This scares the shit out of the most powerful industry the world has ever seen. The industry, which oppresses the planet to gain more money to spend on yachts or private jets. In days full of #fakenews it is easy to paint a dark picture of this new threatening technology. First they laughed about it, then they were trying to fight it with false allegations such as

Bitcoin is used for terrorism

As if terrorism was funded with bitcoins. Last time I checked, Saudi Arabia and Qatar are big supporters of terror and the $ and € keep on flowing into the country from Germany, France, USA etc. Weapons, human trafficking and drugs are widely dealt with in one currency only, which is the US Dollar. And you cannot trace US Dollar bills, but you can trace every single bitcoin!

Bitcoin has no value

A couple of days ago I read this piece „Don’t touch bitcoin“ (in german) where the author interviewed a guy called Manfred Hübner from sentix. Sentix does polls for a behavioural market sentiment. So Manfred basically states the following:

Bitcoins are not founded by anything. Gold, on the other hand, has the precious metal in itself as a counterpart, paper money has the promise of a state as a means of payment

At least he got something right by putting Bitcoin and Gold in one single sentence. Gold has absolutely no value, it is a yellow shining metal. But as history told us for thousands of years, girls and boys loved that shiny color. It helped, that gold wasn’t available at every single street corner, instead people must put a lot of effort in finding it. So basically gold digger trusted a bank to receive fiat money, if they will exchange gold. It’s trust! By the way, Venezuela is a not so shiny example what happens, if the people loose their trust in the currency. At the end of the day the Euro has a value, because Europeans trust in it.
I know, it’s a big loop for guys like Manfred, but the people in the bitcoin (replace this with any other crypto) community trust in the fact, that they are able to purchase goods, trade stocks or exchange values with the digital gold. So bottom line, this argument is rubbish.

The intrinsic value of a bitcoin is 0 and it will eventually fall.

Well, what’s the intrinsic value of Gold or Silver? Ok, granted, Silver is used in some industries to build stuff. But c’mon, again it’s called trust. By the way, why people buy US Dollar as a safe haven may be the case, because 8 out of 10 cases it’s the very same USA who started the crisis. Makes kinda sense, doesn’t it? So again, this argument is rubbish.

If banks or states are to rely on crypto currencies in the future, then they will set up their own and not use existing ones.“

That’s my favorite. He doesn’t get the concept of bitcoin at all. Take Gold for an example. Even that most of it was already digged out of the mud, it still has value. But at one point in the future, all Gold will be on the market. Same with Bitcoins. Take Euros for example. The ECB is flooding the markets with billions of new bills and this doesn’t make a financial expert cringe? Every little street market operates on the principle of offer and demand. If there would be an endless amount of tomatoes, what would that do to the price of tomatoes? Right, it’ll go near to 0. The old system grasps any straw to stay in power, whereas in a Bitcoin world they ain’t having it anymore. His argument is not false, but it shows his lack of understanding the pure principles Satoshi has built it on.

Bitcoin price is going skywards

Another argument many publications use over the last weeks. Blablabla. So did Facebook and Tesla. What they all have in common? They are disruptors. They do things differently and the old world doen’t cope well with dramatic changes.

Barely anyone is talking about the fact, that Ether (the token from Ethereum) has risen 2000% since January this year.

Is there a bubble or not?

How would I know (for sure)? Of course it is a risky investment, but so is Tesla. Considering the market cap of Bitcoin today, it is a drop in the ocean in the financial markets. 40bn US$ is nothing compared with the value of Gold. That is over 200x more valueable than Bitcoin. For me personally Bitcoin is undervalued, because

  1. it is way more practible as Gold. Have you every tried to send a Gold coin to a friend? Bitcoins move in minutes across continents
  2. it is a store of value and a safe haven, because no one can tamper with it. There were countries which enacted a Gold ban. Try this with Bitcoin. You can carry them on an USB stick, send them anywhere and nobody can stop you
  3. it is the world’s biggest trust machine. The one and only immutable notary, where no human is able to interfere with

I’ve put a lot of thought in my predictions for the BTC/USD by the end of 2017. I remain cautiously optimistic and set the price tag to $4500.

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