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Why the "B"itcoin Opportunity Is So Much More Than the Price of "b"itcoin
The pop media is now circling with '"b"itcoin is dead' commentary, prompting me to state yet again, that the value proposition that the "B"itcoin technology represents is grossly misunderstood, if it is even captured by the pop media at all. Remember, Bitcoin with an uppercase "B" is the blockchain, the transport mechanism, the scripting language and the decentralized, distributed trust consensus ecosystem upon which my startup is focused to build solutions upon. "b"itcoin with a lower case "b" is a digital currency and oft times digital payments app, simply early applications (and the most rudimentary ones) in the early portion of this paradigm shifting ecosystem.
As a matter of fact, the drastic drop in the price of bitcoin serves to highlight the true value of those utilizing the technology behind bitcoin - the blockchain. The drastic drop (or pop) in prices does nothing to alter the business models of these companies. The value proposition lies in the blockchain and programmability, not in the price of individual currencies within a digital currency app - yes, bitcoin as a payment system or speculative currency is an app within an ecosystem, not the ecosystem itself. Until one is able to grasp this concept one will simply be chasing the erratic prices swings of a single cog within a complicated machine up and down - all the while missing the opportunities within.
To proclaim the death of bitcoin due to a drop in the price of components of one of its apps is akin to proclaimng the death of the Internet due to the drop in the price of AOL stock. Yes, it does sound assinine, but that's what the media is proclaiming.
A tightly related, yet tangential story can be used to prove my point (for those that are not familiar with UltraCoin, it is a blockchain-powered Global Macro trading app that allows anybody, anywhere to trade almost anything with any amount of money on a counterparty/credit risk-free basis). WSJ reports: Macro Horizons: Shock Swiss Policy Turn Alters Equation for Other Central Banks:
WRAP: The Swiss National Bank rocked European markets in early trade by abandoning its euro floor. Unable to resist the pressure of euro devaluation against the dollar, and with more likely to come as the European Central Bank prepares to launch quantitative easing, the SNB faced catastrophic losses on its mounting holdings of the eurozone currency if forced to abandon the one-sided peg sometime further down the line. The immediate significance is for people elsewhere in Europe who hold Swiss franc-denominated mortgages, to Swiss corporations which find themselves suddenly 20% or so less competitive against eurozone rivals and to leveraged investors betting that the SNB would hold fast forever. More generally, it reminds people that central banks aren’t invincible. Ultimately, their efforts and intent can be defeated by even stronger market forces and by having to weigh difficult political judgments. Ironically, one of the outside effects over which they have no control are the actions of their counterparts in other countries – which is what the SNB’s will do to others. Poland’s central bank now has a whole new game plan to think about in a meeting Thursday whose decision is due shortly. And a string of earlier central bank decisions in Asia, including a surprise rate cut by India, now have a different meaning for their currencies because the Swiss central bank has just put the franc back into the mix as one of the globe’s safe havens. (AM, MC)
SWITZERLAND: Switzerland’s central bank abruptly ended its policy of maintaining a minimum exchange rate of 1.20 Swiss francs to the euro, while at the same time cutting its key interest rate to a negative 0.75% from 0.5%. The Swiss National Bank also said that it was moving the target range for three month Libor to between -1.25% and -0.25% from the current range of between -0.75% and 0.25%.
In what must be one of the most currency market-shattering announcements made by a central bank in recent memory, the SNB ripped the ground out from anyone with an interest in the Swiss franc-euro exchange rate. At one point the euro collapsed to 0.86 against the Swiss franc, from 1.20 immediately before the announcement – a 28% move. That must stand as one of the most dramatic developed market currency moves ever. The SNB justified the move by saying that the 1.20 ceiling had been put in place at a time of serious Swiss franc overvaluation and that while the franc continues to be expensive, it is no longer quite at such an extreme – in part thanks to the dollar’s recent surge. We await fallout among investors holding Swiss equities and macro hedge funds who had taken the 1.20 level to be sacrosanct. (AM)
On that note, notice the trade on this 100% bitocin blockchain powered application. We are going long the Swiss Franc (betting that its spike against the euro will continue past the news event this morning (NYC time) due to its floor decoupling/unpegging from the lagging euro and short the leverlaged oil ETF which had a deadcat bounce up over 7% for the night, where we're assuming it will continue its drop. This is all done in one trade, and this is the power of the bitcoin blockchain. Forget the price of the widgets of that one blockchain app and open your mind to the future of distributed decision making.

For the more adventurous, here's a long CHF short EUR and GBP trade.

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Don't get suckered Reggie. And don't ruin your history of good calls!
Bitcoin is only fully anonymous if you buy into it with cash (not easy to do) and ultimately it disproportionately favors early adopters (as a pyramid scheme does).
A spike in Bitcoin popularity will inevitably be followed by a flood of other, "alt-coin" competitors, diluting its appeal. A rise in interest rates would make all digital currencies less attractive too.
The bitcoin market is rife with front-running, collusion, naked shorting and all manner of thumbs on scales.
Your best chance of making a killing in Bitcoin is to be on the right side of a pump-and-dump.
Bitcoin as a store-of-value proposition is more or less a joke. The open ledger system Bitcoin leverages on the other hand does have real potential in all kinds of areas...but Bitcoin isn't one.
Google 'Izabella Kaminska bitcoin' and check out her extensive analysis of Bitcoin on FT Alphaville and her own blog Dizzynomics. She's probably the best, most informed and sharpest Bitcoin critic out there.
It's behind a registration wall but her latest article on Bitcoin is FT's most recent post right now:
http://ftalphaville.ft.com/2015/01/16/2091482/how-to-corner-markets-bitcoin-style/
Thank you... Are you able to predict the future. Goldman Sachs former management seems to play a big role in this endeavor.
You appear not to understand Bitcoin. Not once did you mention the blockchain, scriptability, zero trust or decentralized distributed consensus. It appears as if very, very few of the ZH crowd get bitcoin, and I believe the reason is the token's price is what has dominated the media. The price of bitcoins are essentially IRRELEVANT! See
Currency Brokers Fighting Insolvency Are Learning the Value of Our Blockchain Technologies - the Hard Way
for the reason why. Once you get past looking at bitcoin as a speculative trading commodity and realize its an ecosystem and development platform (like the Internet and the web) you will see things in a whole new light.
Reggie, but you are aware that running the bitcoin infrastructure involves costs - and these costs so far have been covered by distributing bitcoins to the service providers? If so, you never ementioned it. To state that a collapsing price of bitcoins (even if just in fiat currency terms) doesn't affect the business model is ignorant to say the least and borderline deceptive. If the price doesn't recover, the infrastructure will slowly be thinned out and will become ever more vulnerable to cyber attacks and all sorts of dirty plays. Which would end the trust in bitcoin and once that was gone, it would be game over. Your blockchain won't pay you any bills
"The open ledger system Bitcoin leverages on the other hand does have real potential in all kinds of areas...but Bitcoin isn't one."
The two are inseperable. It is impossible to have a de-centralised blockchain system without a value token which insentivises mining. It is the mining process itself that provides trust and security to the blockchain. The blockchain and a Value Token are intrinsically connected. You cannot have one without the other. Bitcoin has solved this problem very elegently. Once you understand how the bitcoin protocol / system actually functions you will start to realise that this system is like comparing the current financial system to a wooden sailing ship versus a modern jet airliner.