“I think what we’re witnessing here is a revolution,” said Masters in a CNBC interview. “Bitcoin is emerging as the transactional layer of the Internet, as programmable money and as digital gold.”
XBT Provider is part of the KnCGroup AB, which also owns KnCMiner AB, a bitcoin processing technology provider.
Bitcoin’s Market Expands
Short term, there has been a lot of interest from Asia, Masters noted. In Japan, bitcoin has become legal currency. There has also been emerging interest in India and South Korea.
In 2014, Masters said bitcoin had 1,000% volatility, one interviewer pointed out. Asked if the volatility has been removed, Masters said the volatility has been diminishing. This has happened as it has expanded to more exchanges and as the short side of the market has emerged.
Asked what the next catalyst is for the bitcoin price going forward, Masters said there has been an increasing reach into both the retail and institutional markets. “We’re now being covered on Nasdaq OMX by 27 different broker-dealers, and that is a stark increase from what we saw a year or two ago,” he said. ,
He said his company is doing $40 million in trades per month, a sharp uptick in volume. “I can only describe it as an expansion into peoples’ investment portfolios,” he said. Bitcoin has been used in self-investment pension plans.
“This kind of depth of distribution I think is enabling investors to come to the space,” he said.
Regulatory Outlook Varies
Asked if regulating bitcoin is feasible, Masters said regulatory initiatives have been very diverse. In the U.S., he noted the New York Department of Financial Services has taken a very strict regulatory stance. In the U.K., the FCA has not brought bitcoin into the FCA’s regulatory sphere. Jurisdictions with weak domestic currencies have tried to ban bitcoin, he said, without naming those jurisdictions.
“The thing is that bitcoin is a peer to peer system, and it is actually very difficult to intermediate that and to regulate,” he said. “What we’re seeing, however, is boundaries between fiat currency and bitcoin now being policed quite heavily.”
Economic Historian Weighs In
Garrick Hileman, an economic historian at the University of Cambridge and the London School of Economics, agreed demand for bitcoin is increasing. He said positive regulatory and macroeconomic developments are driving demand in numerous markets, namely Japan, South Korea, Venezuela and Nigeria.
Hileman said a bitcoin split is still a concern as the bitcoin community faces a scaling issue. Increasing the size of the transaction blocks would require splitting the blockchain in two, creating two separate coins.
The historian said a successful resolution of the scaling issue would likely drive bitcoin to new highs. If not, the price could tumble. Hileman said the “frothiness” in the initial coin offering market could result in a regulatory reaction that could undermine the price.
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Last modified: March 4, 2021 4:56 PM