What's the future of Bitcoin?
On Thursday I tweeted the value of Bitcoin but by the time I posted the message on Twitter it had halved in price.
This may be a bit far-fetched but only just. Last year Bitcoin’s value soared from $1,000 to nearly $20,000 as the world went cryptocurrency crazy. This year it’s dropped to $6,000. At the time of writing this it was standing at $8,560. Talk about volatile.
So is cryptocurrency the best thing since sliced bread or a bubble about to burst?
As the editor of a tech magazine this question niggled away at me so much over Christmas and New Year that I resolved to devote the beginning of 2018 to understanding the wider issue of cryptocurrency and blockchain.
I listened to podcasts; watched YouTube videos; spoke to experts; read countless reports; attended speeches; and on February 2 I hosted BusinessCloud’s packed event entitled ‘Cryptocurrency & Blockchain: What is it? What next? How do you become a crypto-millionaire?’
Investors shared their stories; Ben Semchee – aka Bitcoin Ben – flew in from America to give us his take; and academic Gavin Brown, senior lecturer in financial economics at Manchester Metropolitan University, gave us a fascinating summary of the history of cryptocurrencies and a glimpse into a future with blockchain technology.
So what’s my conclusion now? There’s the rub. Despite all my research the subject continues to polarise opinions.
The key questions for me are these:
• What happens if everyone tries to cash in their cryptocurrency portfolio at the same time?
• How easy is it to take your money out?
• What happens if people stop investing?
Investors like two things: certainty and double digit growth. Unfortunately, when it comes to cryptocurrencies, they’re not mutually compatible.
One of my favourite speakers at BusinessCloud’s event was straight-talking tech entrepreneur and cryptocurrency investor Scott Fletcher. The founder of Manchester-based ANS has recouped his original investment but has left a sizeable chunk of money on the table.
“Don't put money in that you can't afford to lose,” he said. “Treat it as going to Vegas.” He says people would be crazy to invest too much and crazy not to invest at all.
Even Ben Semchee – aka Bitcoin Ben – who is a big advocate of cryptocurrencies warns people to educate themselves before parting with any cash. He compares it to walking into a dark room. “Walk slowly,” he said. “If you hit your toe, you hit your toe, you don’t trip and fall and break your arm.”
Cryptocurrencies are disruptive and the traditional banks are vulnerable. Hardly surprising then the banks have been among the most vocal critics.
So what do I think? I’ve no doubt that a lot of people have made a lot of money by trading in cryptocurrencies but I worry about the FOMO (Fear of Missing Out) brigade. You wouldn’t buy a house or a company without doing due diligence so do your homework before investing in cryptocurrencies or ICOs (Initial Coin Offerings).
The one thing I would say is that the blockchain technology that cryptocurrencies like Bitcoins sit on is here to stay, especially given the growth in the Internet of Things.
Blockchain is about a lot more than just the financial sector. It has the potential to change everything from transport, healthcare and property.
I’m old enough to remember people saying the internet wouldn’t take off and look at it now. Will we be saying the same about cryptocurrencies and blockchain? Time will tell.