Last week, the world’s largest bitcoin conference took place in San Francisco. Despite bitcoin holding a $200 billion market cap in Q2 2019, cryptocurrency conferences receive less press than tech conferences from companies with comparable market caps, such as Oracle World, Dream Force or even Oktane, a conference by a company with a fraction of the market cap that receives ample press coverage.
Despite naysayers, Bitcoin has proven to be a revolutionary, digital asset. Worst case scenario, if you had invested in bitcoin as a long-term investment at the height of each bubble and sold at the bottom of the crash (due to terrible luck and timing), you would have seen 82-fold returns from $39 to $3,200 over the last decade or 3-fold returns from $1,151 to $3,200. There are those who bought at $19,000 who are still licking their wounds, but these were not long-term investors.
Quite a few of the speakers at the conference have been holding bitcoin since its early days as a long-term investment. There are key reasons as to why bitcoin will make a solid long-term asset over the next five years and may reach its peak as a new technology with mass adoption in seven to ten years. Follow me for a three-part series entitled: “Is Bitcoin a Good Investment” with analysis on three important phases to the bitcoin tech cycle: institutional adoption, global economic uncertainty and digital payments.
Privacy and Bitcoin
One of the highlights at the Bitcoin Conference 2019 was a fireside chat with Edward Snowden (yes, that Edward Snowden), who dialed into the conference for a thirty-minute webcast on privacy. The crowd was ecstatic to say the least, as technologists and privacy advocates are usually one and the same. When you work in the industry, you see too much and know too much to be complacent over privacy, and bitcoin technologists are no exception.
Hackers endorsing bitcoin can be a double-edged sword, however, as institutions circle the cryptocurrency with no official adoption just yet (i.e. SEC regulated platform). The cryptocurrency is well adopted in the hacker community and will now require broader adoption to see its full potential.
Onion routing is one method of concealing location and online activity from network surveillance or traffic analysis. Tor Project is a group of developers who offers onion routing to reduce the likelihood of sites tracing actions and data back to a user. Going beyond a Virtual Private Network, onion routing conceals IP addresses although the use of Tor can be traced.
Isabela Bagueros of Tor Project spoke at the Bitcoin Conference 2019 and her message was clear – that VPNs are centralized and not to be trusted for anonymity. The proliferation of bitcoin and concerns around financial privacy will likely draw more attention in the years to come as Bitcoin has an inherent, anonymity issue as every transaction is public data. Meanwhile, specific solutions that combine full anonymity over a computer network and the use of blockchain and/or bitcoin have not been developed at this time. Bitcoin is a step direction towards financial privacy, but as many of the panelists pointed out, there’s still more to be done.
Bitcoin Vs. Libra
Tim Draper is well-known in the startup scene and is a founding partner of Draper Fisher Jurvetson. He has been an early advocate of bitcoin and one of the more publicized spokespeople on the topic, especially around his first prediction that bitcoin would hit $10,000 (this came true), a second prediction that it will hit $100,000 and his current prediction that bitcoin will hit $250,000 by 2023.
When Draper was asked about the effects of Facebook’s Libra coin, he pointed out that two drawbacks is the coin relies on fiat currencies and is also controlled by Facebook, and therefore, goes against the ideals of decentralized cryptocurrencies.
During a panel that included Max Keiser of the Keiser Report, Bill Barhydt of Abra and Anthony Pompliano of Morgan Creek Digital, Libra was seen as potentially a positive thing for introducing crypto wallets to the 2+ billion users across Facebooks apps. At the very least, Libra will normalize the concept of carrying crypto and transacting in crypto even if there is little success with the Libra currency.
Dovey Wan, the founding partner of Primitive, expressed on a separate panel that Libra is not much different than AliPay, a digital payments platform used in China that does not require cash or credit cards to transact.
Facebook is not the only company placing large bets on the future of crypto. During the same week as the conference, Hotels.com announced a partnership with Lolli to reward Hotel.com customers with micro units of Bitcoin. Moneygram also recently announced that Ripple will be its main partner for cross-border transactions that use digital assets.
In my upcoming three-part series entitled “Is Bitcoin a Good Investment,” I cover three important phases to the bitcoin tech cycle: adoption by institutions, global economic uncertainty and digital payments.
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