When bitcoin price reaches new heights, the critics raise their voices. As the price approached the $6,000 benchmark Friday, it didn’t take long for critics to warn of impending doom.
Wall Street banker Jamie Dimon, chief executive of JP Morgan Chase, unleashed another one of his diatribes against bitcoin Friday in response to a CNBC moderator question at an event hosted by the Institute of International Finance, reiterating that he believes blockchain technology is useful but that non-fiat cryptocurrency “has no value.”
Financial analyst Gary Shilling called bitcoin a ‘black box’ and that he won’t be investing in the digital currency. Shilling, president of A. Gary Shilling & Company, said bitcoin is “too opaque and complicated for him to invest” in.
But many cryptocurrency observers believe the rise in bitcoin price is built on solid fundamentals and are optimistic about bitcoin’s future.
Publicity Boosts Bitcoin
“As bitcoin gets more attention in whatever form, positive or negative, the hard fact remains that there are only 17 million bitcoins in existence (with a 21 million limit in total),” said Sol Lederer, blockchain director at Loomia, a technology company creating smart products secured through blockchain technology. “So if everyone just wants a little if only to play with, the price needs to keep going up. We won’t see real change in price direction until there is a real scare to the security of the technology.”
Serafin Lion Engel, founder and CEO of DataWallet, a blockchain technology-based data exchange that allows data producers to reclaim data they create from those who use it for their own profit, thinks critics like Dimon are drawing attention to bitcoin and ultimately contributing to its perceived importance.
“Comments, such as Jamie Dimon’s, drive the bitcoin hormesis we are currently witnessing, where adversarial comments by renowned beneficiaries of the current centralized system simply add to the strength of the bitcoin ecosystem,” Engel said.
“Furthermore, it also simply boils down to exposure: The more people hear that about bitcoin, the more people will adopt bitcoin since its benefits over the past financial system are so abundantly clear,” he said.
Engel said bitcoin has proven to be an antifragile asset which, due to its characteristics of immutability, transparency, and disintermediation, thrives in a world of ever-increasing political and socio-economic uncertainty.
Progress Expected To Continue
Yonatan Sela, senior vice president of business development at YouNow, which serves as an ecosystem for video applications, also expects bitcoin price to continue to rise.
“The soar in the price of bitcoin isn’t surprising, and I expect that while price fluctuations will continue, in the long-term bitcoin will continue to rise in price far beyond $6,000, especially if you buy into the thesis that bitcoin could become the prominent digital reserve currency,” Sela said. “The main reserve currency in the world is gold, with a market cap of ~$7 trillion. Bitcoin is currently at ~$94 billion, which is less than 1.5% of that. Even if it stays just 2% of gold, it will surpass the $6,000 price point.”
Simon Yu, CEO of StormX, a gamified micro-task platform, thinks there are several factors contributing to bitcoin’s growth.
“Although this recent boom is largely caused by the October 25th Bitcoin Gold Fork, as users will receive a free Bitcoin Gold for every bitcoin held, 2017 has been a phenomenal year for cryptocurrency with the boom in ICOs,” said Yu. “I expect the industry to grow even further next year as institutional funds are only now starting to join the cryptocurrency boom.”
Demand for bitcoin and other cryptocurrencies also continues to gain momentum, Yu said, especially as more countries recognize it as a legitimate form of payment and acknowledge its value.
“I expect the price of bitcoin to continue to rise as cryptocurrencies become increasingly mainstream,” Yu said.
Progress on the scalability front also gives reason for optimism, observed Luis Cuende, co-founder and project lead at Aragon, a decentralized platform for building and managing organizations and companies. “I think the rise in bitcoin prices reflects the enthusiasm that the public has into bitcoin being a digital currency and new technical solutions like SegWit, that enable more scalability and new solutions for instant payments,” Cuende said.
Mainstream Acceptance Grows
Rob Viglione, co-founder of ZenCash, a privacy coin for borderless, decentralized communications and transactions, said there is no question bitcoin is becoming more mainstream.
“It’s always tough to say what’s driving prices, but what we do know is that there’s more demand for bitcoin now than ever,” Viglione said. “A big part of that is due to the fact that it has steadily achieved more mainstream credibility and that there’s now a robust global conversation. For those of us who study cryptocurrency characteristics, there’s growing consensus that we’re witnessing the birth of a new asset class, and that’s huge.”
Further price fluctuations are to be expected, according to Bharath Rao, CEO of Leverj, a decentralized platform for cryptocurrency derivatives trading.
“The price should certainly be expected to fluctuate quite a bit, both due to the uncertainty and promise of new technology,” Rao said. “We believe that bitcoin is not yet mainstream and will continue to grow in value as more financial use cases move to crypto. Buying and holding bitcoin has outpaced every single traditional investment since 2009 and is likely to continue to do so for several years.”
Bitcoin’s use in markets where the local currency is heavily controlled will also contribute to its growth, said David Henderson, founder of Sweetbridge, a blockchain alliance seeking to launch projects in industry ecosystems, including protocols for commerce, supply chains and interest-free loans.
“A quick look at bitcoin’s price history (the two pizzas famously ordered by a developer for 10,000 BTC in 2010 would be worth about $30 million each today!) shows the challenges in using this as a transactional currency or as collateral, as the fluctuations are significant and frequent, unlike most fiat currencies,” he said. “That said, it can provide an alternative in countries where the local currency is heavily controlled, restricted and subject to very high inflation.”
The bitcoin price continued its meteoric rise on Friday, climbing as high as $5,840 to make $6,000 seem like a near-term possibility. The price was $5,756.11 Saturday morning.
Featured image from Shutterstock.