December 24, 2015

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Whatever the future holds, many digitally educated experts bow down in admiration to the elegant, efficient “€œledger system”€ that is blockchain. Both bitcoin (BTC) and the blockchain technology behind it were created by a ninja mathematician whose alias is Satoshi Nakamoto. Nakamoto is a hero, real or not. He is accepted as blockchain’s unidentified yet undisputed creator”€”a remarkable coup in itself!

“€œNakamoto”€ commands the unanimous support of an elite group of coders and math genii whom he set in motion to participate in the collaborative algorithm-writing and -solving in blockchain. Stephen Flood writes this in an article entitled “€œBlockchain Promises to Be as Disruptive a Technology as the Internet”€: “€œBehind [Bitcoin] is a technology that is as transformative as I have ever seen.”€

Wait…as disruptive as the internet? What?

In the words of Arjan Van Os at ABN AMRO Bank: “€œBlockchain technology could make our current business model obsolete.”€ (See July 2015’s ABN AMRO report “€œThe Next Big Thing”€ online.)

We lie perhaps in the hands not of the Fed but of an anonymous digital cartel: loosely associated programmers concerned with profiting from the most advanced “€œcryptographic electronic currency”€ so far. There’s something in the wind. BTC’s price against the U.S. dollar on Dec. 20, 2015, @ 20:23 GMT was $444.84. Compare this $449 now with the Jan. 14 value: $177.28. It appears our cryptocurrency is on a little bit of a roll at last. Some speak of another “€œmega-rally”€ lying around the corner (like 2013’s bubble, with its 10x returns). In fact, the majority of BTC forecasters prophesy a steady bull market for 2016 and beyond. One analyst whose avatar is the “€œDollar Vigilante”€ briskly states his target price and reasoning. “€œ$1,799. Biggest drivers: bank, currency and economic collapse.”€

CoinDesk figures revealed 14,985,075 billion bitcoins existent on Dec. 20, and the market cap for bitcoin in circulation stood at a modest $6.64 billion. The graph (on illustrates the number of transactions per day in bitcoin and the trend is gaining sharply upward momentum around now, and has marched steadily upward since inception”€”transaction No. 1 (back in 2007). Today the average number of BTC-denominated transactions is over 110,000 a day and growing. In the past month or two, IBM, Citibank, the NASDAQ, Hewlett-Packard, Dutch Bank, Barclays, and Visa have all expressed their newfound passion for blockchain. What’s going on? Is bitcoin going to have a moment?

Simon Dixon, fund manager at Bitcoin Capital, foresees the brightest year of all his peers for bitcoin. His thinking reflects several of the dilemmas faced by investors and banks alike today. He states that

Investors will start to realize that the banks”€™ favorite buzzword”€”blockchain”€”is far less interesting and valuable than the only blockchain working at scale”€”bitcoin.

Eventually investors will realize bitcoin is more valuable as a global way to transfer value from A to B without needing a bank, bringing new buy pressure to the market and institutional volume [to bitcoin].

Next week we leave bitcoin to the future and ask a visionary precious-metals expert what asset classes are advisable to hold in such a confusing investing environment.

I hope you find a bitcoin or two in your Christmas stocking, either as a currency gamble or an end-of-days fund. It works great for both purposes. 

Happy holidays!


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