Take A Closer Look At The Digital Currency Revolution
Tom Kerr writing on the digital currency revolution…
You may have heard how the CEO of JPMorgan dismissed bitcoin as “a fraud.”
What you probably didn’t hear was that on the same day he made the statement, his own bank was engaged in a panel discussion to examine the investment potential of bitcoin.
That’s the kind of fishy contradiction which old timers like me call “talking out of both sides of your mouth.”
But there is mounting evidence that the mainstream financial sector is taking bitcoin seriously.
The Chicago Board Options Exchange is planning to start offering cash-settled bitcoin futures by next spring. Goldman Sachs and other financial institutions are examining ways to facilitate bitcoin trading on their own proprietary platforms. A biotech company traded on the NASDAQ announced that it is transitioning out of biotech and into digital currency investments. Real estate developers are accepting bitcoin payments for luxury apartments costing hundreds of thousands of dollars.
Some governments now use blockchain – the technology that ensures the anonymity and security of digital currencies – to protect sensitive documents. This is leading security analysts to believe that a blockchain-supported identification system could replace your Social Security number…and make it virtually impossible for anyone to steal your identity.
If the technology is profitable for early investors, they won’t even need their Social Security checks.
But be wary of upstarts.
Within the past few months there has been an unprecedented proliferation of Initial Coin Offerings (ICOs) by those who want to jump on the profitable bitcoin bandwagon.
Investors mint a new digital currency, give it a sexy name, offer it to the public, and then sell their own holdings for a fast profit before the price collapses.
Retired boxer Floyd “Money” Mayweather and career party girl Paris Hilton are among the celebs who have expressed an interest in promoting their own brand-affiliated ICOs…merely to make a quick buck.
Another advantage of bitcoin, compared to those newer ICO offerings, is that it is a limited-edition item.
The Treasury Department keeps printing greenbacks like confetti to keep the lights on and artificially manipulate the economy. But only 21 million bitcoins are going to be produced. Once that number has been minted, there will be no more. The law of supply and demand dictates that the value of each bitcoin in circulation will then rise…as long as appetite for bitcoin continues to grow.
Just a year ago there were approximately 15 million bitcoins in circulation, but now that number is more than 16 and a half million. Some experts expect that bitcoins will hit the 21 million ceiling within the next 12 months.
But, it is estimated that only about 20 million people now own bitcoins…and there are nearly eight billion people in the world who are potential bitcoin buyers.
You don’t need a degree in finance to see how exponentially greater demand could soon intersect with a permanently limited supply…sending bitcoin prices to historic levels. Bitcoin recently traded for about $4,500 per coin, and a former equity strategist for JPMorgan predicts that bitcoin may hit the $6,000 mark by mid-2018.
You don’t have to buy a whole coin to invest, either.
You can start small, and buy whatever fraction of a bitcoin suits your fancy and your financial comfort level. Of course, bitcoin investors have to be willing to tolerate higher levels of risk at this juncture. You shouldn’t invest money in digital currencies right now unless you are willing to lose that money if the market implodes.
But if you have the stomach for it – and some expendable cash – take a closer look at digital currency.
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