Bitcoin's future and possible risks?
In order for Bitcoin to survive long term, it must have advantages over existing currencies, or its adoption rate will stall. Also, because it is a software technology, Bitcoin needs to instill confidence that its network cannot be destroyed by computer bugs or hacks.
Additionally, Bitcoin won't survive if it can be extinguished by outside entities, such as governments or corporations. Also, it won't survive if it is somehow replaced by another.
Does Bitcoin Have Advantages over Existing Currencies?
Many have argued that Bitcoin is just a fad, and after the fad is over, people will realize that Bitcoin has no advantages over paper money. As Paul Krugman has asserted in regard to Bitcoin, "So do we need a new form of money? . . . We have huge economic problems, but green pieces of paper are doing fine—and we should let them alone."
However, a strong case can be made that Bitcoin does have significant advantages over traditional currency. An ideal currency has certain properties that make it as useful as possible. Those properties include portability, divisibility, durability, scarcity, and fungibility. Let's look at each property in turn:
Portability: In a perfect world, money should be light, compact, and easily transported. By this measure, bitcoins easily trounce paper currency: Bitcoins weigh nothing, are stored effortlessly even in large quantities, and can be moved across the world within minutes. Of course, as part of a world financial system, electronic mechanisms are available for storing and transporting traditional currencies in digital form, improving the portability of those currencies as well. However, in terms of simplicity, cost, and speed of portability, Bitcoin has clear advantages at this time.
Divisibility: Everyone knows the frustration of needing to pay someone a small dollar amount but only having a large bill and no change. This problem cannot exist with bitcoins since bitcoins are completely divisible to fractions of a penny. Because computers are efficient at crunching numbers, it's no surprise that they can handle the task of dividing Bitcoin amounts in any way necessary to make change.
Bitpoint Adds Ether and Bitcoin Payments to Platform with Alipay,Unionpay and Wechat Pay.
Japanese bitcoin exchange Bitpoint announced on Wednesday the partnership with Nippon Pay to offer cryptocurrency payment options alongside China’s three most popular payment services.
Bitpoint informed their customers on Wednesday that the company has “agreed to form a business tie-up on the deployment of virtual currency settlement services” with multi-payment service Nippon Pay. With this partnership, China’s three major payment services, Wechat Pay, Alipay, and Unionpay will be joined by bitcoin and ether payment options on the new platform.
Bitpoint is calling this service “the world’s first,” because it is the first time Bitcoin and Ethereum will be offered alongside China’s most popular payment services. The company also claims that this is the first time ether will be offered as a payment option in Japan. In an interview with Payment News, the president of Nippon Pay further made the claim that his service is the first in Japan to offer Wechat Pay and Alipay all in one application.
Tokyo-based Nippon Pay offers payment solutions for businesses with a focus on Chinese mobile payments. “In addition to face-to-face mobile payment at physical stores, we also offer a multi-payment service of China’s three major settlement services; Wechat Pay, Alipay, and UnionPay,” the company explained.
Nippon Pay users make these different types of payments using a smartphone app, available for Android and iOS devices. Two additional payment platforms are planned for the end of the year. One is the top mobile payment service in South Korea, Kakao Pay. The other is the most used mobile payment platform in both Thailand and Taiwan, Line Pay.
Bitcoin has been the top-performing currency in the world in six of the past seven years, climbing from zero to a new high value of about $2,544.80
But the cryptocurrency isn't anywhere close to its potential, according to Jeremy Liew, the first investor in Snapchat, and Peter Smith, the CEO and cofounder of Blockchain.
In a presentation sent to Business Insider, the duo laid out their case for bitcoin exploding to $500,000 by 2030.
MARKETS
Bitcoin just soared to a new $1,600 high — but the first investor in Snapchat thinks it could hit $500,000 by 2030
Jonathan Garber May 4, 2017, 12:27 PM ET
Jeremy Liew
Getty
Jeremy Liew.
Bitcoin has been the top-performing currency in the world in six of the past seven years, climbing from zero to a new high value of about $2,554.80.
But the cryptocurrency isn't anywhere close to its potential, according to Jeremy Liew, the first investor in Snapchat, and Peter Smith, the CEO and cofounder of Blockchain.
In a presentation sent to Business Insider, the duo laid out their case for bitcoin exploding to $500,000 by 2030.
Their argument is based on increased interest in bitcoin, thanks to:
Bitcoin-based remittances
Remittance transfers, or electronic money transfers to foreign countries, have almost doubled over the past 15 years to 0.76% of gross world product, data from the World Bank shows.
"Expats sending money home have found in bitcoin an inexpensive alternative, and we assume that the percentage of bitcoin-based remittances will sharply increase with greater bitcoin awareness," the two said.
Uncertainty
Liew and Smith said increased political uncertainty in the UK, US, and developing nations would help elevate the level of interest in bitcoin.
"We believe bitcoin awareness, high liquidity, ease of transport, and continued market outperformance as geopolitical risks mount will make bitcoin a strong contender for investment at a consumer and investor level," the two said.
Mobile penetration
Liew and Smith said the percentage of noncash transactions would climb from 15% to 30% in the next 10 years as the world becomes more connected through smartphones.
The global smartphone penetration rate is 63%, and the total number of smartphone users is expected to increase by 1 billion by 2020. The GSMA, a trade body that represents the interests of mobile operators worldwide, says 90% of these users will come from developing countries.
This would make it possible for nearly everyone to have a bank in their pocket, and that should provide a boost for bitcoin as well. Liew and Smith say bitcoin could account for 50% of all noncash transactions.
Here are the basic model drivers Liew and Smith used:
Bitcoin price of $2,554.80 on 29 June 2017.
Network users will grow by a factor of 61 from now until 2030. "Put another way, we need a population of bitcoin users around a quarter of the Chinese population (or 5% of the global population) in 2030 to see bitcoin at $500k," Liew and Smith told Business Insider.
Bitcoin's user network grew from 120,000 users in 2013 to 6.5 million users in 2017, or by a factor of about 54, and this could be just the beginning. Growth of that magnitude would mean 400 million users in 2030.
The average value of bitcoin held per user will hit $25,000. "As institutional investor cash in bitcoin, sophisticated investors trading bitcoin, and bitcoin-based ETFs proliferate, we think the average bitcoin value held will increase to around $25k per Bitcoin holder," Liew and Smith said. Currently, with bitcoin's market cap of $16.4 billion, each of its 6.5 million users holds $2,515 worth of bitcoin on average.
Bitcoin's 2030 market cap is decided by the number of bitcoin holders multiplied by the average bitcoin value held.
Bitcoin's 2030 supply will be about 20 million.
Bitcoin's 2030 price and user count will total $500,000 and 400 million, respectively. The price was found by taking the $10 trillion market cap and dividing it by the fixed supply of 20 million bitcoin.