There are numerous cryptocurrencies, but the two best known are Bitcoin and Ethereum1. Bitcoin suffered a price collapse last Friday from a high of about $US6820 down to about $US5556. It went up to about $6500 before dropping down to $5700 again, then rising to $6750 when the Japanese market opened before settling at about $65002.
The drop in Bitcoin seems to have been due to boosting of Bitcoin Cash, which had been split off from Bitcoin some months ago. Bitcoin Cash differs in its priorities. Bitcoin is focused on being decentralised, public permissionless censor-resistant network that anyone can use and build on. Fast cheap payments are a secondary concern. In contrast, Bitcoin Cash is mostly focused on enabling fast, cheap payments over the network3. However, this all stopped when billionaire Mike Novogratz bought $15 to $20 million worth of Bitcoin. Novogratz is a partner in a cryptocurrency fund named Galaxy Investment Partners, and they own significant amounts of Bitcoin, Ethereum, other cryptocurrencies and companies2.
Novogratz said he expects major financial companies will soon start to offer bitcoin or similar products as an investment option. This he refers to as the institutionalisation of cryptocurrencies. Novogratz is of the opinion that Bitcoin will hit $10,000 by March 2018. He agrees that Bitcoin is, as many people have indicated, a bubble, but he believes that it is justified because it is a technological advance which will fundamentally change our lives2.
The Governor of the Bank of Japan, Haruhiko Kuroda, has stated that he does not see any serious problem arising from cryptocurrencies at present, but added that the bank is carefully watching developments2.
These events come on top of American venture capitalist Tim Draper’s comments, that fiat currencies will no longer be in use in five years’ time as they will be replaced by cryptocurrencies. He bought 30,000 Bitcoin in 2014 (at a cost of about $18 million). They are now worth $214 Million2.
While everybody seems to have an opinion on the future of cryptocurrencies, the experts make these predictions.
- Bitcoin and Ethereum are here to stay
- Other digital currencies will make it big
- Some people will lose money
- Investing will be decentralised
- Cryptocurrencies will eventually be regulated
- The cryptocurrency market will stabilise
- Cryptocurrencies will make incumbent financial institutions drop prices4
Excellent reporting… wishing I hadn’t forgotten my password to 0.27342 of Bitcoin…