Yes, the Bitcoin bubble already popped in 2017 since it was built on amateurish enthusiasm & FOMO — it’s a different story now
Over the years I have heard the endless tirade of Bitcoin/Crypto skeptics saying they don’t have any intrinsic value, it’s a fraud or a Ponzi scheme. The best one yet was from Warren Buffet — the ‘Oracle of Omaha’ and one of the most successful investors of all time, who said Bitcoin was ‘rat poison squared’. Apparently, something that doesn’t produce anything physically doesn’t come up to his investing benchmark. Wonder what he is thinking now?
Coming from someone who has a questionable track record of investing in tech companies because, apparently, he didn’t understand them — it didn’t mean much for people who understood the technnology behind cryptos. However, contradicting his own tech argument, he took up a huge position in Apple by buying about 252 million shares in 2019. So what were the criteria there?
His and some of the other crypto antagonists comments’ came around the time when Bitcoin had either peaked or started its almost two and half year bear run. What a difference a year makes, which is like an eternity in the Cryptoverse (running 24/7). Bitcoin has seen an astronomical rise since Mar. 2020. So far the premier digital currency has risen almost 1,000% from the pandemic-trough to chart an all-time high in the region of $48,400.
However, the exponential rise this time around has been driven by a sound set of fundamentals as compared to the amateurish exuberance that we saw in 2017. I covered most of the factors in the piece that I wrote earlier about the rise of Bitcoin in 2020. The ballooning institutional interest & the shrinking supply are perhaps the two biggest factors behind the rise. BTC is not only increasingly being considered as a store of value, but also a medium of exchange.
Bitcoin is currently in unchartered territory and nobody knows where the current bull run is going to stop or take a pause, but the mainstream adoption and investment is showing no signs of letting up anytime soon. The biggest news came when Electric Vehicles pioneer Elon Musk came out with support for Bitcoin & the general cryptos. His adding #bitcoin to his Twitter profile alone was enough to propel BTC higher by a few thousand bucks in a matter of hours. But this was just a precursor to what was about to come later.
His EV company Tesla Inc later revealed it had bought $1.5 billion of the cryptocurrency and would soon accept it as a form of payment for cars — this sent the premier crypto to a new ATH. This was on the back of the world’s largest asset manager, BlackRock, announcing that it would give its clients the opportunity to explore investing in Bitcoin. And these are not the only big players investing in the space, here is the list of Top 10 Public Companies owning Bitcoin:
❶ MicroStrategy — 71,079 BTC
❷ Tesla — 42,857.14 BTC
❸ Galaxy Digital — 16,402 BTC
❹ Marathon Patent Group — 4,812.66 BTC
❺ Square — 4,709 BTC
❻ Hut 8 Mining — 2,851 BTC
❼ Voyager Digital — 2,537.25 BTC
❽ Riot Blockchain — 1,175 BTC
❾ Coin Citadel — 513 BTC
❿ Argo Blockchain — 501 BTC
Credit: Bitcoin Treasuries
On the digital payments front, two of the biggest credit card merchants — Visa & Mastercard are moving in the direction of allowing customers to transact in cryptocurrencies. The latter via its partnerships with Wirex and BitPay will allow its customers to seamlessly convert their fiat currencies to digital assets and vice versa. Visa, on the other hand, is developing a suite of application programming interfaces (APIs) that will allow banks to offer bitcoin services.
The Visa Crypto APIs pilot program will be utilizing the infrastructure provided by Anchorage — which is the first federally chartered digital asset bank in the U.S, to allow their customers to buy and sell digital assets. Previously, Visa has partnered with 35 crypto firms to issue bank cards dealing in digital assets. The aim here seems to be of bridging the gap between traditional assets & digital assets.
Talking about Anchorage being the first regulated digital asset bank, Seattle-based Protego Trust Bank is the second institution that has received conditional approval for a trusted charter from the Office of the Comptroller of the Currency (OCC) to custody digital assets. Protege plans to offer a trading platform for clients, a service for issuing new digital assets, and a peer-to-peer lending platform for its clients.
So you can see the infrastructure is either being put in place or the existing one is being tweaked to accommodate the transactions, storage & investment of the digital assets. Although the group of Bitcoin skeptics has shrunk recently with all these developments, there are still people who believe Bitcoin is just a thing for speculators to get rich while allowing a rogue group of nefarious players to launder money, apart from being a colossal waste of energy.
For me, it presents a whole new monetary system of digital payments & storage of value that is not controlled or manipulated by any central government or big banks. And above all, it presents an opportunity for billions of unbanked people around the World to be a part of the new financial system. The digital transformation is real and the future is now.