The road to the $10,000 Bitcoin
I’m a Bitcoin newbie.
Like most people in the tech sector, I only really started paying attention to the flagship cryptocurrency during its meteoric climb past $1000 in late 2013, and its subsequent crash to sub-$400 a few months later.
I still remember the dot.com bubble bursting 14 years ago, and to me, the media frenzy around Bitcoin’s February 2014 crash had a deja vu feel to it.
The Internet resounded with the “death of Bitcoin” in the same way that print publications trumpeted the demise of the Internet itself back in 2000. In both cases, I think they missed the point. The technology itself wasn’t the problem.
What’s most striking though is the pace at which we’re recovering from these misadventures. While the Internet bubble took a good 7 years to develop and implode (from the Mosaic Browser’s 1.0 release to the Single Most Volatile Day in NASDAQ history), Bitcoin is hitting these milestones in half that time.
It may seem counter-intuitive to be lauding a failure as catastrophic as the $300-million Mt. Gox meltdown, but growing pains are an essential part of any major technological upheaval. This is the part in the story where we weed out the Pets.com’s and WorldCom’s and replace them with the Google’s and the Amazon’s.
Whatever momentum was lost in the first quarter of 2014 is coming back quickly.
Investments in the Bitcoin space have jumped from just $2.1 million in 2012, to $75 million in 2013, and is now over $120 million in only the first half of this year. As bigger and bigger companies start accepting the new currency as official payment options (very recently: Expedia, Dish Network, NewEgg, Domino’s, and Holiday Inn), the adoption trend is pointing steeply northwards.
The potential threats to Bitcoin’s survival are not trivial, however.
The technology could be proven to be insecure (mathematically improbable), or prohibited by governance (it happened in China), or be brought down by a concerted external effort (it would theoretically cost a little over $100 million to do so).
What’s interesting is that none of those 3 scenarios would stop the cryptocurrency dead — it would only force it to adapt and evolve.
Consider the fact that the legislation against file-sharing giants like Napster and Kazaa only served to pave the way for Bittorrent, a superior decentralized technology that is now impossible to stamp out.
As long as Bitcoin survives the next 2 to 3 years, there’s no doubt that it will continue growing at an explosive rate. It was already the best investment of 2013, far outstripping the combined growths of Netflix, Twitter, and Amazon within that same period. Most analysis points to a value in the thousands of dollars within the next 2 to 3 years, with quite a few indicating a $10,000 price point.
Boom or bust
But price speculation is less interesting to me right now than the challenge of user adoption. For all intents and purposes, we’re introducing Money 2.0 to a userbase who may or may not even be aware that we even need a new version.
We were all born into a world where the cash in our wallets are worth less every year, and we accept those losses due to inflation as an irrevocable fact of life.
But money shouldn’t behave that way. In reality, this is a consequence of the fact that fiat currencies are simply an out-of-date platform for us to be building financial wealth on.
For the vast majority, simply promoting Bitcoin as “Money Made Better” won’t really cut it, of course. Espousing the virtues of deflationary currency may make for scintillating dinner conversation, but it doesn’t scale very well when we’re trying to reach millions of individuals.
This is the main reason I’ve gone all-in with the cryptocurrency industry: coming up with creative ways to introduce Bitcoin to the Filipino mainstream is an exciting, mind-bending, and challenging process.
One of our company’s first attempts is with the selfie contest website, BitStars.ph, which combines something innocuous and familiar (i.e., selfies) with a very soft introduction into the world of Bitcoin. Too many “Bitcoin for Beginners” websites out there fixate on explaining what Bitcoin is, instead of just showing you right away, and Bitstars.ph lets users jump right in sans preamble.
At a recent Bitcoin meetup, I was speaking to a colleague about how short the time horizon was for figuring out where all of this was heading. By 2016, we would all either be 20 times wealthier than we currently were, or we would be starting over from scratch in a completely different sector of the tech industry.
We were half-joking of course, but it’s become apparent to me now that this is the tech industry to be watching.
The way I see it, we're 50/50 to either go 20x or bust in 3 years’ time, and boy, do I like those odds. – Rappler.com
Luis Buenaventura has been building tech startups in the Philippines for 7 years and recently joined Satoshi Citadel Industries, a holdings company focusing on facilitating Bitcoin adoption in the country. He currently leads SCI's consumer product development.