Three Predictions on Blockchain & Bitcoin
In Macbeth, we have the predictions of the three witches. Here, we have curated three 2018 predictions for blockchain and bitcoin that we found noteworthy — we hope you will enjoy them as well!
Previously the Global CIO for SAP, and the Group CIO at UBS, Oliver Bussmann is a globally recognized thought leader in topics around digital transformation, innovation and FinTech. In his article titled “2018: Another Growth Year for Blockchain”, he comments on blockchain adoption as follows:
So, what will the new year bring? Despite the obvious perils in making predictions, I feel confident that, among other things, we will see the following:
- Blockchain solutions will continue to come into production as the “low-hanging fruit” are addressed.
- Cryptocurrencies will continue to grow, fueled by traditional asset management players and techniques.
- Companies will focus on changing business models as blockchain begins to transform market structures.
- New ecosystems with smart contract technology will arise as integration platforms between existing industries.
- The ICO will become “professionalized” and morph into IPO 2.0.
- Scalability and performance of blockchains will become a critical issue, and there will be interesting new approaches
- People will increasingly recognize that local blockchain ecosystems are a critical success factor.
Eric Jackson, Founder and President of EMJ Capital, has made his name as an activist investor in Yahoo!, before founding his own firm in 2017, and committing to a “friendlier” approach. He is a contributor to TheStreet. His “Tech & Media Predictions for 2018” include the following:
First Institutions dip toes in water for Bitcoin and price explodes. Bitcoin and other cryptocurrencies have been the story of 2017 and I guarantee you that no one at this time last year was predicting that in these kinds of articles. Even though the price rise this year has been astronomical and made critics come out and warn against the past excesses of the dot com bubble, there’s an important point to make: virtually no institutions have yet participated in buying cryptocurrencies. The reason is that they have no defensible way to custody their crypto holdings. Imagine if you’re a large pension fund and you allocate half a percent of your assets to crypto as an asset class and then find out a month later that it’s all disappeared in some Mt. Gox-like event. That cannot happen and so institutions have been waiting on the sidelines. There are a number of private companies (as well as larger public ones) working on an answer to this problem.When they can provide some reasonable assurances of their acting as a custodian, expect many institutions to rush into the market. And when that occurs, expect a corresponding rise in prices.
Doug Kass is the president of Seabreeze Partners Management Inc. He has been publishing his annual “surprises” for 15 years, finding beauty in a variant view. “ There is something special about adopting a non-consensus view and watching it become reality despite protests from many corners. […] The purpose of my annual Surprise List is to get readers to think more deeply about a variety of issues and to consider the contrary.” His 2018 list includes the following:
Surprise #4: The Cryptocurrency Bubble Pops and Gold Makes New All-Time Highs
My Surprise is that though bitcoin becomes ever-more popular over the near term and rises to more than $21,000, the price plummets to under $2,000 during 2018.
The publication of this surprise — that bitcoin will collapse in price in 2018 — results in growing public criticism on Twitter and elsewhere from bitcoin devotees over the next few weeks toward me. I am called a “no coiner,” a term given to bitcoin disbelievers such as myself. “No coiners” are defined as people who missed out on the rise in the price of bitcoin and have become skeptical and bitter, and who state that it’s only a matter of time before the price collapses because it’s a collective delusion.
In early 2018 the popularity of cryptocurrencies such as bitcoin crests. Bitcoin ATMs even become commonplace in Boca Raton, Florida, reminding us of the historic relationship between that town and past frauds and schemes. (Boca Raton has been the home of so many fraudulent schemes — currency trading schemes, rare coin scams and the sale of timeshares for fictitious vacation homes. Former Securities and Exchange Commission Chairman Richard Breedenfamously said that Boca Raton is “the only coastal town in Florida where there are more sharks on land than in the water.”)
My surprise is that bitcoin trades above my target of $21,119 by early January but crashes in 2018 to under $2,000 and falls toward and eventually below the cost of mining the cryptocurrency, which today is about $1,000 to $1,500.
The initial pause and sizable break lower in bitcoin’s price is when market participants begin to realize more fully that the supply of cryptocurrencies, in the aggregate, is unlimited with low entry barriers. The threat and realization of this risk is prompted by Apple Inc. (AAPL) and Amazon.com Inc. (AMZN) , which introduce their own easy-to-use and faster cryptocurrency blockchains. (Note: Amazon already has received a patent for its own blockchain technology — 8,719,131 — see here and here.)
JPMorgan Chase & Co. (JPM) causes a stir after CEO Jamie Dimon’s previously negative comments on bitcoin by introducing “JPMorgan E-cash,” its own cryptocurrency. Soon thereafter, other banks follow suit. As well, several governments (including the U.S.) introduce their own government-based cryptocurrencies based on their desire to continue to control policy levers such as money supply and fiscal policy.
The eventual demise for bitcoin commences in earnest when it is revealed in a New York Times expose that less than 10 entities, mostly residing in China and Japan, are found to have manipulated the price of bitcoins higher in Ponzi-scheme fashion over the last two years. The cryptocurrency bubble finally collapses in dramatic fashion and falls in value by 90% as a result of direct government intervention and a successful hacking where thieves penetrate the blockchain code and steal a large amount of coins.
Several large, well-known hedge funds desperate for “alpha” are caught with their pants and portfolios down and with a large weighting in bitcoins and other cryptocurrencies; they lose more than 30% of their funds’ assets and value and are forced to liquidate their cryptocurrency holdings and close their funds.
Bitcoin will ultimately assume a permanent place in the Speculative Hall of Fame, along with tulips (1636–37), the dot.com bust (1999–2000), the housing bubble (2005–07) and the South Sea Bubble (1711–20), as traders and investors learn the lesson, once again, that an asset class founded on the notion that there is a greater fool who will be willing to buy that asset for more than the previous fool paid, almost always ends in disaster.
The year 2018 will be one in which investors come to understand that blockchain technology — a distributed database of records of transactions that are executed and shared among participating parties and are validated by a network of users, called “miners,” who contribute computing power in exchange for the chance to garner coins using a shared database and distributed processing — is real (each transaction is encrypted and can’t be replicated or altered), but that bitcoin is a mirage and becomes, like many past schemes, a byword for Ponzi-like nostalgia.
Interest in gold, which has been sidelined for months amid the cryptocurrency frenzy, regains popularity, reverses direction from the lower left to the upper right and moves higher in price.
In an abrupt and swift flight to alternativesafety, gold makes new all-time highs and becomes the single best-performing asset class in 2018.
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