The future of Bitcoin
The “coin” is the perfect currency for the shadow economy. However, it is not an investable asset, by any means, and any reasonable investors should stay away from it. The blockchain technology on which it is based, on the other hand, can have many interesting applications in different sectors.
Bitcoin and other cryptocurrencies are the latest rage of investors all over the world. They are based on a revolutionary technology – blockchain – a high tech version of an accounting ledger that was invented by bankers in the Renaissance Italy. The blockchain technology is set to make a revolution in (or, using the modern parlance, disrupt) many sectors, most notably in finance.
The technology in question basically allows anonymous, secure and verifiable storage of information, which is open to everyone to see but with no one having the ability “to mess” with it, that is before a way is found to do this.
Bitcoin was the first and remains the most known product of application of the blockchain technology in the financial sector. Its rise to popularity was nothing short of spectacular. And there is an obvious reason for this: it seems to be a perfect currency for the shadow economy.
In my opinion, however, there is one major inherent drawback of the bitcoin as currency: it is not backed by any assets, nor even “faith and credit” of any country. Its value increases and falls with the market sentiment of whatever value the bitcoin should have at any given moment.
This value has been going through the roof lately – driven exclusively by rising demand and speculative interest at the situation of limited new supply. The supply for this thing, however, is potentially unlimited and with the development of ever faster computer chips and better computational algorithms the cost of “mining” new bitcoins is set to drop precipitously in the near future.
So, my advice is straightforward and simple: stay away from the bitcoin and its look-alikes.