In 2013, the Winklevoss brothers announced that they owned 1% of all bitcoins in existence at the time. They had spent a significant portion of their settlement with Mark Zuckerberg over his alleged theft of their social media site idea on the cryptocurrency.
At around fifty dollars, bitcoin was considered outrageously overpriced by most experts at the time, and their bold investment received ridicule from around the world. Now, when the bitcoin price has surged north of 11,000 dollars, no-one is laughing. The Winklevoss brothers are the world’s first bitcoin billionaires. Good for them.
The market capitalization of bitcoin is currently around 175 billion dollars. No-one knows where it will end up or how high it will go, but it is quickly getting being noticed.
It’s likely that the ongoing surge is a bubble and that bitcoin will crash. How do we know? Bitcoin has surged and crashed before – no less than three times. There is nothing unique about a bubble bursting, but what separates bitcoin from the has-been post-bubble crowd is that it has recovered from its busts and surged again to new highs.
That’s unusual. It probably means that bitcoin is here to stay.
It appears that the recent boom is due to investors in Asia flocking into the cryptocurrency, and many of them are Chinese. China is far less robust, either politically and economically, than people in the West tend to believe. The fear of turmoil and inflation is palpable among Chinese investors, and they all have exit plans in case China collapses. Stocking up on bitcoin has become one of them.
Sensing that bitcoin was somehow a threat to its power, the Chinese government finally banned it earlier this year. The result was that Japan became the bitcoin capital of the world overnight.
While the price initially fell on the news that China banned the digital tender, it has since resumed its rise. The prohibition may paradoxically have contributed to this. Japan has a well-established, transparent, and liberal regulatory framework for cryptocurrencies and has even recognized them as legal payment. This means that most of the bitcoin trades today occur in a secure, first-world country with the proper rule of law.
Bitcoin seems to be addressing the rot that has been taking place in government-controlled banking for decades. Ultimately, it could disrupt the entire financial system, as noted earlier here at Liberty Nation.
The entire ecology of cryptocurrencies and blockchain technology is still in its early stages of development. As hyped as Bitcoin might be right now, it is not extensively used as its creators intended – namely, a currency for buying and selling goods. Therefore, it has a lot of room for future improvement and market penetration. Bitcoin may crash once more, but don’t be surprised to see it alive and kicking ten years down the line.