Believe it, or Not, There is more Upside…A Lot More
So, how high can Bitcoin (BTC) go? In other words, what is the “fair value” of this crypto-currency? According to the Winklevoss Twins, Bitcoin could be valued at $33,000/BTC…presuming all Bitcoins were mined and put into circulation. Of course, the Winklevoss Twins are biased with their valuation because they have a major stake in this crypto-currency. Other major sources, including MarketWatch, approximate the fair value at about $25,000 – $50,000/BTC, by the year 2030. Now, these five-figure amounts may seem absurd, and I am certain that we would all like to see the derivation of these figures. Regardless, we cannot deny the yuuge gap between Bitcoin’s current trading price and the proclaimed five-figure valuations.
Perhaps, this big gap is partially due to uncertainty. After all, the government did not officially declare Bitcoin as a legitimate currency – even though the Internal Revenue Service recognized the crypto-currency as a “capital asset” or “commodity”, recently. As such, the Federal Government plans to tax people who trade Bitcoin in the related exchanges, such as Coinbase. This makes the crypto-currency “more legitimate”, even though major Bitcoin proponents hate the idea of being taxed on a decentralized, secure, and supposedly, anonymous form of payment.
Even though the US has not officially declared Bitcoin as a currency, other nations, such as Japan, Bulgaria, and Finland are allowing BTC as a form of legal tender. It only takes a few major changes, such as an increase in the acceptance of crypto-currency payments by major retailers like Amazon and Wal-Mart or Target, to flip the switch. As of now, the government does not really care about Bitcoin because the market is just not big enough for them to dedicate any time or resources. Once when the market is big enough and there’s enough crypto-currency circulating in our economy, then they will have no choice but to pay attention to what’s happening in the crypto-currency world.
Late to the Boat
One of my closest friends from way back in elementary school, who is also a prominent member in the crypto-currency community, introduced me to Bitcoin. Back then, crypto-currency exchanges did not exist. To purchase and own Bitcoin, you would need to buy units from another Bitcoin owner via smart phone electronic wallet transfer. Back then Bitcoin was trading at about $200/BTC, and I wanted to allocate about $1,000 to Bitcoin. However, the whole buying process seemed like too much of a hassle, and the maintenance of a smart phone electronic wallet seemed like a big security risk. I mean what happens if my phone got lost or stolen? Would I be able to recover my Bitcoins? Now, we do not have to worry about such things, considering we have crypto-currency exchanges for easy access. The largest and most well-known exchanges are Coinbase and Poloniex. Both are backed by major players in the financial industry.
If you have been sitting on the sidelines with Bitcoin, then just think about this: Two years ago, Bitcoin was trading at about $520/BTC. Even at this “low level”, there were tons of articles all over the financial news world, including big names like CNBC and MarketWatch, questioning whether Bitcoin was overvalued. Fast forward to the present, Bitcoin just reached a new high of $2,286.77/BTC a couple of minutes ago and continues to reach higher highs. Analysts, at the end of 2016, predicted the crypto-currency would reach $2,000/BTC – $3,000/BTC, in 2017. Since we already surpassed the $2,000 level, chances are we will see $3,000/BTC, sooner than later.
There is a competing crypto-currency, called Ethereum (ETH), which has been gaining a lot of traction lately. Unlike Bitcoin, Ethereum is not solely intended to be a form of digital currency. Rather, ETH is a platform which enables developers to deploy various applications and Smart Contracts.
An example of how Ethereum may be used is allowing a hotel guest to gain access to a hotel room via her smart phone. The smart contract will allow access once when an agreed amount of denominated currency is deposited into the hotel’s bank account, within a certain period of time. Through this contract, there is no need for a human being to be at the premises at the time of the transaction. The contract allows the guest to unlock or lock the hotel room via her smart phone once when she electronically transfers the money into the hotel’s bank account. There’s less room for human error (i.e. – the bellhop misreads the guests’s name, types in the wrong letters or numbers into the hotel’s computer system, or just forgets to record the guest’s check-in), and everything is more secure – there are less outside parties involved in the whole transaction…the only parties involved in the smart contract are mainly the guest and the party who’s in charge of the hotel. On top of the accuracy and security, everything is recorded on to the Blockchain. Neither party can lie about payment or delivery of service because there is a “written paper trail” left behind in the Blockchain.
As we can see, Ethereum is just a more versatile platform and could be used in many varying settings, with much broader appeal. This is why many big conglomerates, such as Microsoft, JP Morgan, and Intel are backing, developing, and integrating ETH in their businesses.
Ethereum just reached a new high of $189.17 a couple of minutes ago and can continue to reach new highs for the coming days. Even with this much of a run up, ETH is still considered very cheap…considering all the potential uses it can provide in the future. In fact, many people in the crypto world are stating that ETH can overtake Bitcoin in the future as the largest and most utilized crypto-currency in the planet. This means that ETH could be worth more than the current $2,286.77 at which Bitcoin is trading now. So, if you thought you missed the boat on Bitcoin, here’s another one, right in front of you, right now.