What’s It Worth? The Five Faces of Bitcoin
Bitcoin continues to defy technical analysis and traditional prediction models. Wall Street investors are quick to point out that they’ve never seen anything like it, and that the futures market will finally tame it, making it less volatile and more easy to game.
But Bitcoin knows better. It’s that unlikely asset class bubbling up from the digital ground, combining different factions and conflicting ideologies.
Most price predictions are really projections about what makes Bitcoin tick. Technical analysis can often span such large price windows that it can result in no meaningful price prediction at all.
Indicators like the prevalence of social media, news of adoption and a general cold or fuzzy feeling about cryptocurrencies can go underplayed, as we enter a new paradigm about money and the role of government oversight and central banks.
If we concede that Bitcoin is really a new form of gold, we might as well also admit that Bitcoin is actually a contestant in a beauty pageant or a singing competition. The judges fall into five primary camps with no single bloc having more voting power than any other.
1. The Winklevoss Twins
Tyler Winklevoss and Cameron Winklevoss, dubbed the “first Bitcoin billionaires” are the founders of Gemini and the first to hold hands with Cboe to launch Bitcoin futures, introducing the digital gold to Wall Street portfolios. Despite rumors of bull traps, price manipulations and other shenanigans as the Bitcoin futures market rolls out in the mainstream, as the owners of 1% of all the Bitcoin in the world, the Winklevoss twins are ultimately interested in having Bitcoin rise in price – to the moon and beyond. By tapping into the large pool of derivatives capital, Wall Street can make financial history by pumping massive cash into Bitcoin by using cash-settled futures.
2. Roger Ver
Often referred to as “Bitcoin Jesus”, Roger Ver is an early adopter who invested in several blockchain startup companies, including Ripple and Kraken. But he soured on Bitcoin and has staked his trust on Bitcoin Cash, a hard fork that he claims is more robust and scalable. Through his media outlet Bitcoin.com he has tried to educate crypto traders about Bitcoin’s slow transaction speed and the accumulation of unconfirmed transactions. His friend Jihan Wu owns Antpool, the number one mining pool with 17.3% of the hashrate distribution. His miners can flip the switch at any point in time, fleeing Bitcoin and switching to Bitcoin Cash, if mining the latter becomes more profitable.
3. Adam Back
Adam Back is the co-founder of Blockstream, the development team behind Bitcoin Core. Pitted against the Bitcoin Cash enthusiasts along with Bitcoin’s many rivals (Bitcoin Gold, Bitcoin Diamond, Litecoin, Iota, Vertcoin and others), Back and his team have to prove that Bitcoin can scale and manage transactions without dragging down Coinbase or shutting down Gemini or Bittrex due to an overwhelming number of customers. The Lightning Network also needs to demonstrate that it’s not the corporate, expensive, centralizing shill its detractors claim it is, positioned to hijack Bitcoin from its peer-to-peer functionality by placing it into the hands of a small group of developer-investors who will make bank on LN transaction fees, effectively making the network a digital bank.
4. Traders, Developers, Libertarians
Bitcoin and its future can either bolster or trash the entire cryptocurrency market that includes altcoins, ICOs, blockchain enthusiasts and Satoshi purists. These players position themselves to break away from Bitcoin, thriving or failing regardless of Bitcoin’s future. The more altcoins thrive, the more Bitcoin will need to distinguish itself as the new Millennial gold. While Ethereum spawns a massive network of smart contracts with developers creating every conceivable blockchain project, and as IOTA refines the Tangle and its ecosystem, more digital platforms will use the blockchain to disrupt commerce, finance, transportation, health care and other industries. This group of innovator-supporters will fuel profound changes affecting the future of control and centralization. They will allow every individual to dream about new types of freedom – crushing burdensome bureaucracy, shredding paperwork, eliminating the business model of extortion-through-middlemen, and reducing the need for tedious and costly certifications and transactions solely designed to verify trust. As the entire cryptocurrency ecosystem evolves and grows stronger with more use cases, altcoins and Bitcoin will have a symbiotic relationship that may see a significant shift of capital from the latter to the former, where altcoins gobble up more of the total market capitalization. But as the market cap expands overall, Bitcoin’s price will increase.
5. Financially Strapped Global Citizens
As long as the world watches economies collapse, Bitcoin will be a lifeline. From Venezuela to Zimbabwe, citizens who’ve lost trust in their governments will continue searching for higher ground. When global wealth distribution remains stagnant and skewed, a push to disrupt the status quo will persevere. Headlines like “World’s eight richest people have same wealth as poorest 50%” and “Share of national wealth held by America’s 1% hits 50-year high” are the key reasons why Bitcoin has intrinsic value. Bankers may be blind and unable to spot global poverty or suppressed wages, but when money, power and control remain in the hands of a few, billions will try to reshape the money game and rewrite all the rules. To that end, Bitcoin is leading the way.