Reading an article in today’s Wall Street Journal 4/13) claiming “Bitcoin’s Use Is No Match to the Hype” my first reaction was to grab the iPhone, hit my wallet app and dump all my bitcoins. But wait. The WSJ? Boy, the last several times I saw articles in the ‘Journal’ that prompted me to a quick spontaneous reaction I bought internet stocks in 2000 (new paradigm), a couple of investment homes in 2007 (real estate can’t go down) and sold all my stocks in 2008 since headlines said the financial markets were doomed. So now bitcoin is so last week?
Going back “forever” to 2008 when bitcoin was introduced it immediately began developing a hard core following of “miners”, coders and “believers” that saw massive upside potential. Discussions raged through social media, chat rooms, forums and good old word of mouth. Talk of how bitcoin would become a world currency, a “replacement” for global central banks, a medium of exchange world wide and a new ‘safe haven’ in lieu of gold was rampant. In fact, all those things have happened, or are in the process of happening. Indeed, bitcoin has risen to be the dominant “coin” in the cryptocurrency world and has certainly made a huge footprint in everything tech.
So now I read an article in the WSJ that after eight years bitcoin isn’t living up to the hype? Really? Not after eight years which apparently is a lifetime in today’s nanosecond world? Lets think about this. Most people only learned the word bitcoin in the last year or so, and a massive amount more STILL have not heard of bitcoin. To have a totally new concept of a global currency, AND its associated blockchain technology (again, a new word to the masses) to get where it is in under ten years is………well, remarkable. How long has Apple been changing the world? 40 years. Google? 20 years. Just because you can’t plop down a bitcoin for a doughnut in Casper, Wyoming today doesn’t mean you won’t be able to next year.
Just in the last year several significant changes have taken place that will have major implications for the acceptance of bitcoin on a more massive scale. While the Journal story cites the fact that China has “cracked down” on many of the bitcoin trading exchanges thus resulting in new regulations and free trading platforms now charging fees (spoiler alert; all exchanges charge fees), this is a great step forward. While 90% of bitcoin trading originated in China previous to the new regulations, that trading has now disbursed to Japan and the U.S. (so far). The research site CryptoCompare now estimates that China’s share of trading in bitcoin has fallen to only 13%, BUT overall trading volume certainly didn’t drop a corresponding approximate 75%. I consider this “positive diversification” with a huge number of new traders being brought into the market as bitcoin becomes more mainstream. One of the most significant events happened just a a few short months ago when Chicago’s CME Group teamed with London based CrytoFacilities to establish the bitcoin reference rate (BRR) which is a “price fix” essential to hedge funds, investors, etc to be able to have a daily pricing mechanism. In conjunction with the BRR the CME now also has a live bitcoin real time index (BRTI) which shows the bitcoin price aggregated from multiple global buy/sell platforms. With the CME Group (the Merc to us ‘experienced traders’) getting involved bitcoin just got instant CREDIBILITY, RECOGNITION and transparency. When one of the world’s leading exchanges gets involved it is certainly not a sign of “hype eroding”, but rather a form of acceptance and maturing.
The Journal article mentions the American consumer just has not embraced bitcoin as of yet even with a few (very few) companies now accepting them. The article attributes that lack of ‘enthusiasm’ to a “diffuse group of followers” and no ‘real’ champion, or cheerleader, to “fire up the masses”. But wait, that small group of companies only began starting to accept bitcoin roughly three years ago. Three years ago? A revolutionary technology coupled with a new form of currency that most people only learned the existence of a few years ago AND its not fully embraced yet? Its just getting started. Wait till just ONE major consumer company accepts bitcoin (Amazon?) and we will see an article saying bitcoin is UNDER hyped.
Obviously bitcoin will spawn competitors and ‘wannabe’s’ just as every new innovation does, but bitcoin is “the brand” as it were, the household name, the “go to” Google search and the global “wallet leader”. The CME is involved in pricing and developing ways to hedge bitcoin trading positions, global central banks are discussing bitcoin, world governments are looking at ways to regulate bitcoin, taxing authorities are discussing bitcoin and worldwide trade is rapidly learning how to use………….bitcoin. All in less than eight years. Makes Apple (40 years) and Google (20 years) look like turtles stuck in the mud in speed of notoriety. Now THAT’S reality hype.