Warren Buffett has been a vocal critic of Bitcoin in recent years, repeatedly dismissing the cryptocurrency as worthless and a risky, speculative asset.
Crypto fans have brushed off the billionaire investor and Berkshire Hathaway CEO’s warnings, driving Bitcoin’s price up as much as 350% to record highs over the past year.
Here are Buffett’s 16 best quotes about Bitcoin and crypto, edited and condensed for clarity:
1. “Cryptocurrencies basically have no value and they don’t produce anything. They don’t reproduce, they can’t mail you a check, they can’t do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person’s got the problem. In terms of value: zero.” – CNBC, February 2020
2. “It’s ingenious and blockchain is important but Bitcoin has no unique value at all, it doesn’t produce anything. You can stare at it all day and no little Bitcoins come our or anything like that. It’s a delusion basically.” – CNBC, February 2019
3. “If you and I buy various cryptocurrencies, they’re not going to multiply. There are not going to be a bunch of rabbits sitting there in front of us. They’re just gonna sit there. And I gotta hope next time you get more excited after I’ve bought if from you and then I’ll get more excited and buy it from you. We could sit in the house by ourselves and we could keep running up the price between us. But at the end of the time there’s one Bitcoin sitting there and now we’ve gotta find somebody else. They come to an end.” – CNBC, May 2018
4. “In terms of cryptocurrencies generally, I can say almost with certainty that they will come to a bad ending. If I could buy a five-year put on every one of the cryptocurrencies, I’d be glad to do it, but I would never short a dime’s worth.” – CNBC, January 2018
6. “It’s a mirage basically. It’s a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money just because they can transmit money? I hope Bitcoin becomes a better way of doing it but you can replicate it a bunch of different ways. The idea that it has some huge intrinsic value is just a joke in my view.” – CNBC, March 2014.
7. “It’s not a currency. It does not meet the test of a currency. I wouldn’t be surprised if it’s not around in 10 or 20 years. It is not a durable means of exchange, it’s not a store of value. It’s been a very speculative kind of Buck Rogers-type thing and people buy and sell them because they hope they go up or down just like they did with tulip bulbs a long time ago.” – CNBC, March 2014
8. “A rising price does create more buyers and people think ‘I’ve gotta get in on this’ and it’s better if they don’t understand it. If you don’t understand it you get much more excited than if you understand it.” – CNBC, May 2018
10. “You’re going to be a lot better off owning productive assets over the next 50 years than you will be owning pieces of paper or Bitcoin.” – CNBC, March 2014
11. “I get in enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don’t know anything about? We don’t have to know what cocoa beans are gonna do, or cryptocurrencies, we just have to focus on eight or 10 stocks.”- CNBC, January 2018
12. “It draws in a lot of charlatans. It’s something where people who are of less than stellar character see an opportunity to clip people who are trying to get rich because their neighbor’s getting rich buying this stuff that neither one of them understands. It will come to a bad ending.” – 2018 shareholder meeting
13. “Bitcoin has been used to move around a fair amount of money illegally. The logical move from the introduction of bitcoin is to go short suitcases because the money that was taken in suitcases from one country to another – suitcases will probably fall off in demand. You can look at that as the economic contribution of bitcoin to the society.” – CNBC, February 2020
14. “We don’t own any, we’re not short any. We’ll never have a position in them.” – CNBC, January 2018
15. “I don’t have any Bitcoin. I don’t own any cryptocurrency, I never will. I may start a Warren currency, maybe I can create one and say there’s only going to be 21 million of them. You can have it after I die but you can’t do anything with it except sell it to somebody else.” – CNBC, February 2020
16. “I’m really sorry it happens because people get their hopes up that something like that is gonna change their lives.” – CNBC, February 2019
Investing in blockchain technology has become hot due to its role as the database for cryptocurrencies and digital transactions.
You can invest in blockchain technology via stocks of companies that offer cryptocurrency-related services or are developing other industrial applications for it.
Despite its growth potential, blockchain technology should be seen as a high-risk investment. ETFs are the safest way to play.
Bitcoin often dominates the financial news, riveting investors with its volatile price swings and appreciation potential. Getting far less attention, though, is blockchain, the database technology on which the cryptocurrency rests.
A blockchain is like an electronic ledger. Data can be entered into it, but cannot be altered or erased, giving it its much-celebrated property of permanency (and implied integrity).
Many blockchains have emerged since the first one that made bitcoin’s debut possible in January 2009. Some of these blockchains support cryptocurrencies like bitcoin, while others support multipurpose digital platforms – such as Ethereum – that work like decentralized versions of more traditional (i.e. centralized) platforms and networks.
Investing in blockchain technology has become a hot topic over the past few years. There are numerous ways to do it too, since blockchain technology doesn’t relate only to cryptocurrencies. It also encompasses:
Companies that offer cryptocurrency-related services (such as crypto-exchanges, where you trade currencies)
Companies that are building their own blockchains for other industrial/ business purposes
Let’s look at how to invest in such companies, along with the pros and potential pitfalls of blockchain investment.
What is blockchain technology?
A blockchain is a database that is usually operated by a distributed and public network of participants, although a growing number of companies have begun using or building private blockchains (also known as “permissioned” blockchains).
The purpose of such blockchains is to create digital records – of transactions, certificates, or contracts -that can only be added to, rather than changed or deleted. Rather than relying on a single entity to enter new information, they use a “consensus mechanism” that sees multiple participants use cryptography (the science of encrypting, or coding, data) to validate new entries.
“There’s no need for a third-party, such as a bank or a regulator, to verify actions because it’s a shared process, secured by cryptography. This removes intermediaries and creates a framework that improves trust, transparency, and efficiency across different, and very separate, organizations,” says Hadyn Jones, senior blockchain market specialist at PwC.
Why invest in blockchain technology?
It’s this promised improvement of trust, transparency, and efficiency that has transformed blockchain tech into an attractive investment prospect. Blockchain has applications in a wide range of industries, where the companies implementing blockchain tech will gain a competitive advantage over rivals.
“Using blockchain, organizations can build greater trust and transparency in areas such as the provenance of pharmaceuticals, food ingredients, or component parts. Solutions can also be created that support commercial transactions, the issuance and trading of securities and cross-border payments,” says Jones.
“In our Time for Trust report, PwC’s economists estimated that blockchain technology has the potential to boost global gross domestic product (GDP) by $1.76 trillion over the next decade,” he says. “So it is natural to see why investors would be interested in those leading companies that can deliver most in blockchain-related services.”
Put simply, by reducing costs and increasing profits, blockchain tech may make companies more profitable. Bigger revenues would obviously raise their stock shares – and the portfolios of investors who allocated capital to them early.
But they don’t have to be tech plays. More broadly, blockchain investment can also involve investment in companies that work specifically with cryptocurrency (such as crypto-payment platforms like Square) and those that have invested in crypto (such as MicroStrategy).
Because the performance of these companies revolves around the performance of cryptocurrency prices themselves, they’re more likely to rise in correlation with cryptocurrency prices. And with bitcoin rising by around 300% in the past 12 months, investors with a taste for high-growth stocks may be drawn to them.
Ways to invest in blockchain technology
One simple way to invest in blockchain technology is to buy shares in any publicly traded company that’s either using or building blockchain tech, or that works with or invests in cryptocurrency.
Individual blockchain stocks: general companies
When it comes to firms using or working with blockchain technology, some of the most prominent publicly traded companies include:
IBM (offers blockchain services)
Amazon (offers Amazon Managed Blockchain service)
Intel (offers blockchain services)
Nvidia (sells GPUs to cryptocurrency miners)
AMD (sells GPUs to cryptocurrency miners)
Mastercard (working on blockchain-based cross-border payments with R3)
Honeywell (using blockchain to track sales)
DocuSign (offers blockchain service)
JPMorgan (created its own cryptocurrency, JPM Coin, and its own unit for blockchain projects)
Canaan (manufactures mining hardware)
Silvergate (offers banking services to blockchain and cryptocurrency firms)
CME Group (operates a market for bitcoin futures contracts)
Overstock (digital retailer which accepts bitcoin)
As cryptocurrency becomes more mainstream in its uses, it’s likely that more crypto firms will be publicly listed. For example, Coinbase – the largest crypto-exchange in the U.S. – is planning to hold its IPO in early 2021.
Blockchain funds
Buying individual stocks isn’t the only way to gain exposure to blockchain.
“There are funds that provide exposure to blockchain technology, largely grouped along the lines of traditional [investment] funds,” Jones says.
Holding a portfolio of assets, mutual funds and exchange-traded funds always tend to be the individual investor’s instrument of choice, offering diversification – and thus less risk – at relatively low cost. But they have a special advantage with this sector.
While a few options exist, like the aforementioned Grayscale Bitcoin Trust, bitcoin ETFs remain scarce: In the US, the SEC has refused (as of early 2021) to allow them, due to the difficulty of accurately assessing the currency’s value and liquidity.
No such problems exist with blockchain. There are a growing number of blockchain ETFs now available. These invest in a selection of companies working with blockchain tech. Some of the biggest include:
Despite its promise, blockchain technology remains an immature sector that hasn’t fully proven itself in terms of viable products.
“As an emerging technology, blockchain is no different to other emerging technologies such as quantum computing, electric aviation, or spatial computing all of which involve taking risk to innovate,” says Hadyn Jones.
So there are a number of tips worth keeping in mind when looking to invest in blockchain tech.
Do your due diligence: Lots of companies claim to be involved in blockchain these days (remember Long Blockchain?), but some are pursuing the technology more meaningfully than others. It’s for this reason that research into a particular firm, and its fundamentals, is particularly important.
“The starting point is to build a case for the investment itself based on factors such as the opportunity for growth, the competitive environment or differentiating factors relative to other projects,” says Jones.
Treat blockchain as a high-growth, high-risk sector: As with tech stocks, blockchain stocks represent a high-growth sector that exposes investors to plenty of risk. Because the wider utility of blockchain still remains mostly unproven, it would be wise to invest only a small portion of your available capital in blockchain companies and to diversify in other areas as much as possible.
Watch out for new laws and regulations: Keeping up to date with regulators is just as important as researching individual companies, particularly when so much of the blockchain sector remains unformed. Government officials and agencies may potentially legislate in a way that significantly disrupts blockchain-focused companies.
“Understanding the regulatory backdrop is also a useful indicator, and with both the UK and EU investing time in readying themselves for legislation relevant to digital assets, the underlying blockchain technology is very much on the administrations’ radar as a driver for growth,” says Jones.
Concentrate on the bitcoin connection: Yes, blockchain investing has advantages over bitcoin investing. But, given that bitcoin remains the most successful use of blockchain technology to date, some analysts advocate fixing on firms that mostly use it to work with the cryptocurrency.
“The best way to invest in companies working with blockchain technology would be to focus on companies leveraging themselves to bitcoin. Companies that own bitcoin on their balance sheet like Square and MicroStrategy, or companies that are creating businesses on top of bitcoin like Square, Paypal, Coinbase, Silvergate Bank, Galaxy Digital, Hive, Voyager,” says Adam Pokornicky, the COO at Digital Asset Investment Management.
The financial takeaway
Blockchain technology represents an exciting area of innovation that now crosscuts many different sectors. Its possibilities have piqued the interest of investors throughout the world, insofar as they promise higher-than-average growth.
Interest in blockchain tech has also been generated by interest in cryptocurrencies like bitcoin, which has risen in price by 300% in 2020 alone.
This is why anyone seeking to invest in ‘blockchain tech’ should concentrate at least as much on companies offering crypto services or investing in crypto, as opposed to focusing on those solely using blockchain.
At the same time, investing in a blockchain ETF may be a wiser strategy than investing in individual blockchain-related companies, since these cover a broader range of firms.
Scott Belsky is the chief product officer of Adobe and founder of Behance, Adobe’s social media platform. He’s an early investor and product advisor for top startups including Pinterest, Uber, Carta, and Airtable.
As 2020 comes to a close, Belsky predicts eight major trends to emerge in the tech industry in the near future.
He says talent will increasingly own their audiences through apps like YouTube, TikTok, and Patreon, and that systems and apps supporting creativity will be emphasized over productivity tools.
Belsky also says an era of “eduployment” will emerge, integrating the process of choosing a trade, getting an education, finding a job, or starting a company.
As we pull ourselves out of the ditch that was 2020, there are a few major themes of the future I’m particularly excited about. I’m sharing them as a way to connect more dots, meet more founders, and solicit input to further develop these ideas.
No surprise, some of the companies I mention within these trends I know personally, but I have challenged myself to share ideas still on the cusp of breakout rather than the obvious trends and winners. Here they are.
1. The notion of “decentralized” is spreading to unexpected places.
Yes, Bitcoin and blockchain-powered solutions are all the rage these days, and one side-effect is ideas for how other aspects of work and life can be decentralized. For example, Ben Rubin’s /Talk is developing ways to decentralize how teams work (it turns out the very notion of “meetings” may be an archaic and wasteful vestige of centralized workplaces).
The team at Braintrust is using both the principles and technology of blockchain to build a user-controlled talent network. Rather than take any fees or percentage of the participating talent’s income, Braintrust gains value alongside other participants via tokens that become more valuable as the network grows.
The team at CashDrop has built a way for anyone (from a taco stand owner to an apparel designer) to build a storefront without relying on a traditional marketplace that charges commissions or fees. Taking a step back, the traditional model of central owners of community-powered utilities (marketplaces, app stores, etc.) taking a percent of everything (and central “bosses” for huge teams insisting on reviewing and approving everything) may finally be getting old.
2. Behold the era of “eduployment:” The process of identifying a trade, getting an education, and getting a job (or starting a company) will become fully integrated.
Take Nana for instance, a company that will train you in appliance repair (think unique brands of dishwashers, etc), and then set you up in a marketplace to start getting jobs in your local area fueled by leads from the manufacturers of these appliances. Or take Main Street, who will train you as a painter, outfit you with everything you need, and set you up to be a successful business out of the gate within 30 days – essentially turning you into a franchise.
Rather than enduring an expensive education only to assume the complete risk of your career, this new eduployment model, as I’ve come to call it, gives everyone skin in the game. The vertical integration of education and employment is upon us, and I think this trend will help address (at-scale) major systematic issues in our economy at scale while also minting a ton of new small businesses.
3. A few seemingly quirky social apps will tune into the under 16 demographic’s distinct approach to creation as a form of self-expression and tolerance for transparency by default.
I’m seeing more entrepreneurs starting social apps now than in years past, and they’re no longer building off of Facebook’s graph or emulating existing products with slight iterations. Nope, these are (finally) wildly new and original ideas. One of my favorites, under the radar but experiencing rapid growth, is ItsMe. Now approximately #24 in App Store under social networking, ItsMe connects you with others based on your mood, it make you create your own appearance, and allows you to communicate with text, voice, audio, or drawing among other forms. And there are a few other new social models brewing that I am quite excited about.
What do these next gen social platforms share? They combine ephemeral sharing with lasting reputation building, they lean towards default transparency and with a more liberal interpretation of “privacy,” and they have fewer creative constraints and are geared to reward those with the most creative self-expression.
In the category of social, I am also quite excited about the rebirth of Gowalla as a wild social game still a bit under wraps that will take place in the real world, and Public, a social network for public market investing. Suffice to say, the future of social is exciting and, contrary to popular belief, will not be constrained to today’s dominant social networks.
4. Talent will increasingly own their audience, with the rise of “channels of one” and community-as-a-service.
Gone are the days when super talented people needed to sign a contract with a TV network to break through. But the ad-supported and algorithmically-driven alternatives, like YouTube and TikTok, still have the upper hand with talent. The pursuit to “own your own audience” will be a macro trend over the coming years.
Equivalents to Substack (where you build and monetize your own email list) will emerge in video, communities, and other ways to build, manage, and monetize your audience. Some early breakouts like OnlyFans and Patreon give us a sense of what is possible.
I am especially enthusiastic about products like Circle and Geneva that power fully-fledged community functionality for brands and individuals. If you’re a content creator of any kind, you can now spin up a community to gather your audience and spawn all sorts of offshoot services to delight (and monetize) your base.
In such a world, the Instagram and YouTube type products simply serve as top-of-funnel marketing initiatives. The goal becomes simple converting everyone you reach on other platforms to your own privately owned and managed channel. We will see a massive acceleration of this trend in the years ahead.
5. More and more niche functions of enterprise will become multi-player, powered by a next generation of highly specialized, AI-bolstered, enterprise companies with consumerized product experiences.
From procurement and security to financial planning and design, functions of a company that were once siloed to particular teams are being transformed by SaaS tools that are collaborative-by default, easier to use, and inclusive of stakeholders across the company. Those of you who co-invest with me know my obsession with this space.
From companies like Globality for procurement, Sora for HR interactions, Meter for WiFi and IT, Welcome for hiring, closing, and onboarding new employees, there are many approaches and the list goes on. These types of products will fundamentally change how big companies operate across functions while transforming the quality of life for employees.
To help fuel this transformation, WorkOS is building enterprise-readiness as a service, enabling new companies to start selling to enterprise customers with just a few lines of code, with the value proposition “Single Sign-On (SSO) to your app in minutes.” And Scarf is building tools for open source developers to service and monetize enterprise customers. So, lots of energy in this space up and down the stack. One side consequence of all this: increasingly crowded and outdated customer acquisition channels for enterprise SaaS. This is also a problem/opportunity to solve.
6. Creativity tools will be deployed across the enterprise, much like productivity tools were deployed in previous decades.
Until the age of AI, being more productive was the best way to stand out at work. But now, as bots and algorithms supplant mundane and repetitive labor in the workplace, the benefits of human labor will shift to the skills and capabilities that are uniquely human. Chief among them: creativity.
Think compelling ways to visualize data, better ways to share a narrative with your coworkers, attractive graphics to spice up every presentation, and powerful prototypes that are worth a hundred meetings. These capabilities will drive outperformance at work (and in school, and on social) in the coming decades, and everyone must be outfitted to make it happen.
Obviously, this is a major focus in my day job as chief product officer for my creative teams at Adobe. We see this massive broadening of the market divided into two types of personas: content-first creators and collaboration-first creators. The former wants to be start with something – an image, a video or a graphic – and remix or deconstruct. The latter starts by bringing together a group of people and leveraging a shared assets (we’ve been gradually turning Creative Cloud into a “creative system” of sorts for this very purpose). Of course, this need requires new types of tools on modern platforms like the web. Adobe, along with a whole ecosystem of new apps, are working to make this happen.
7. New and disruptive interfaces will emerge that aggregate and connect the underlying services we use to live and work.
This is certainly not a new trend, and I’ve been writing about the “interface layers” and the “battle to be the default” since 2014. But the explosion of SaaS offerings for everyday work (enterprise trend noted above) and life is setting the stage for a new problem and opportunity: How do we stitch it all together?
Consider the digital spaces in which we spend our days – the “home” page of our favorite apps, the finder on our desktops, the home screens of our phones. We’re creating different kinds of documents, files, folders, and teams all over the place. We have specialized apps for everything and must manage permissions in so many places. All of these various cloud documents and services have different schemas and don’t interact with one another – it’s a mess.
Some companies are rising to the occasion, including Command E (an easy keyboard shortcut to open any document, contact, file or record from the cloud) and another early stage stealth company I am excited about. No doubt, all of these underlying services and resources WILL be stitched together, and whoever does the stitching will control the interface where we actually live, work, and make decisions.
8. Another round of the Roaring ’20s is ahead of us, where the pent-up desires from the pandemic will be unleashed in the form of fashion, travel, and culture-bending creative self-expression.
My family and I endured a good chunk of the pandemic with our neighbor and dear friend Jenn Hyman, cofounder and CEO of RentTheRunway, and her family. Needless to say, the stay-at-home world made for a very difficult year for Jenn’s team. But now, with a light at the end of the tunnel, Jenn has a new energy. She believes that post-pandemic fashion will have more fun and edge than ever before.
I agree, and imagine our vaccinated selves fervently jumping back into the world through travel, fashion, parties, concerts, and meeting new people. (After all, the last century’s Roaring ’20s also followed a pandemic, the 1918 Spanish Flu.) Our desire to fill the cultural void that has accumulated in us will result in a form of overcompensation that will make for an epic decade ahead (yes, I’m a relentless optimist).
Like all of you, I am eager to move past the challenges of 2020. I’m hopeful that we emerge more productive from the “great refactoring” we all endured, and that we can all reclaim the ~30% of cognitive load that has been consumed by politics, gaslighting, and a seemingly never-ending stream of things to worry about. With our newfound peace and capacity, may we all dream and build in equal parts!
Scott Belsky is the founder of Behance, which was acquired by Adobe, where he now serves as Chief Product Officer and EVP for Creative Cloud. He is an early investor and product advisor for some of this decades top startups, including Pinterest, Uber, Carta, Flexport, Airtable, and sweetgreen among others. Get his latest book “The Messy Middle” or sign up for his newsletter.Follow him Twitter.
Bitcoin’s market cap could hit a trillion dollars as early as 2021, according to Blockchain.com’s head of research.
“My expectation is that bitcoin will become a trillion dollar asset as early as next year,” Garrick Hileman, who is also a visiting fellow at the London School of Economics, told Business Insider.
Although the 2020 bitcoin rally was largely driven by institutional investors, he expects to see continued buy-in more from retail and Wall Street investors going forward.
The researcher expects the US to digitize the dollar, but not too soon as he said “the Fed is happy with the way the world is.”
Bitcoin’s market cap could reach $1 trillion sometime in 2021 as investors take its reserve currency status more seriously, according to Garrick Hileman, head of research at Blockchain.com.
Major institutional players like Stanley Druckenmiller, BlackRock, Bill Miller, and Jack Dorsey have acknowledged that bitcoin is not only going away, but is becoming a reserve asset and validating the digital gold thesis, Hileman said.
Bitcoin has a current market cap of about $350 billion, while that of gold’s stands at roughly $10 trillion. This week the cryptocurrency gained 12% over two days alone, and was trading at $ on Friday.
“My expectation is that bitcoin will become a trillion dollar asset as early as next year,” the crypto researcher told Business Insider.
Blockchain.com observed a 39% growth in wallet creation year-to-date on its crypto exchange. That is about 17 million wallets created since December 2019.
The exchange saw a broadening of adoption and ownership of crypto assets this year as more people continued to want in on acquiring the token. As many as 100 million people own crypto assets today, according to Hileman.
He noticed a lot of the recent price action was driven by institutional investors, based on transactions that occur on the chain, and is unlike the retail investor frenzy of 2017. On-chain demand and other metrics suggest that the 2020 rally was driven more by institutional hedge funds, family offices, and money managers.
Hileman expects to see continued buy-in from retail and Wall Street investors going forward, rather than corporates. That’s because it is harder for bigger players to participate than professional investors who already have accounts and easy access to major exchanges, he explained.
For bitcoin’s market cap to reach $1 trillion, it would have to hit a price of $54,000 per coin next year – a 130% rally from where it’s at.
As for the US dollar, the researcher expects the world’s most popular reserve currency to be digitized sometime in the next five years. “At this point, the Fed is still taking its time because the Fed is happy with the way the world is,” he said.
The status quo is working well for the dollar because it is dominant through the SWIFT mechanism and the corresponding banking system, he said. The US government can also raise debt at attractive interest rates, supporting the dollar’s status. But a competitive challenge lies in the crypto space and in the rise of stablecoins.
Bitcoin and other cryptocurrencies have become popular again. Bitcoin acts rather like gold for investors in that, when things are volatile and uncertain in the world generally, people rush to safe havens. Gold (and to some extent, silver) has been one of those safe havens for centuries. Now Bitcoin has started to be seen in the same way.
At the end of November 2020, the price of Bitcoin nearly reached the heights it achieved in the glory days of 2017. On 30th November one Bitcoin was worth $19,850.11 (or £14,880) according to CoinDesk, a Bitcoin price index. It gradually slipped down after that and could drop significantly again (in fact it probably will) but the fact that it got as high as it did brought it back into the media once again.
So what’s all the fuss about? What is Bitcoin and what about other cryptocurrencies like Ethereum, Bitcoin Cash and XRP? What is this cryptocurrency thing? Read on to find out!
Bitcoin is a cryptocurrency – in fact the original cryptocurrency – which works in an opposite way to how normal or ‘fiat’ currencies work.
With pounds sterling, for example, we have a central authority – the Bank of England – that produces and ratifies all the notes and coins we use. That goes for pounds sterling in digital form too.
With bitcoin, though, there is no central authority that says how much a bitcoin is or where the bitcoins are in the world. It is all done via millions of computers around the world – decentralising the whole process. Every bitcoin transaction is recorded on every computer taking part in the project and it means that no one can rub out or reverse a transaction as it would have to be done on millions of computers around the world at the same time.
In fact, bitcoin are nothing that you can hold in your hand, or even see on screen really. They’re just numbers. You keep them in a virtual ‘wallet’ on your computer or on a USB device, and you can buy and sell things with them online.
Bitcoin and other cryptocurrencies have ‘crypto’ in the name because of the complicated cryptography that keeps all the transactions safe from prying eyes and stealing fingers. Instead of a central bank or government creating the ‘money’, cryptocurrencies are developed as code by groups of IT people who build in ways that the money can be produced. With bitcoin, for example, people around the world can ‘mine’ for them (online). This is done by using your computer – or several computers – to unlock the cryptography to enable transactions to happen.
it runs on the ‘blockchain’
Blockchain is the decentralised technology on which cryptocurrencies like bitcoin run, but it is also the platform for all sorts of transactions. Blockchain can be used in various areas of life such as voting, art ownership, health, education, property transactions and much more.
The blockchain is a decentralised online ledger, storing information across millions of personal computers across the world, recording transactions in real-time. With the blockchain you can’t rub out or reverse any transactions, you can only add new ones. So if you want to reverse a transaction you have to do it again but in reverse. It’s all totally transparent (which is what makes it so good for voting systems, for example). Everyone can see what is being done so it’s impossible to commit fraud on it (at least that’s the theory).
What other cryptocurrencies are there?
Currently there are well over 2,000 cryptocurrencies (!). As you can imagine, most of them are tiny and very obscure. Some are actively fraudulent and just created by people wanting to steal from the unsuspecting so be very careful before you buy into any of the smaller cryptocurrencies. Best to stick with the most popular ones and only buy them through a reputable cryptocurrency exchange.
The currencies modelled after bitcoin are collectively called altcoins and have often tried to present themselves as modified or improved versions of bitcoin. While some of these currencies are easier to mine than bitcoin, none are currently as valuable as bitcoin and most have their detractors as well as their supporters.
Here’s a list of the most popular ones at the moment:
ethereum
Ethereum is the next biggest cryptocurrency platform after Bitcoin. The coin that works on this platform is known as Ether. Although Ether is the second biggest decentralised currency it’s a long way behind Bitcoin at roughly one tenth of the value. However it is used a lot within the ‘alt-coin’ sphere so it’s useful to have some of these to hand.
ripple (xrp)
Ripple is often poo-pooed by crypto enthusiasts. They say it’s not a proper cryptocurrency as it isn’t fully decentralised. However, it is popular and has real-world application, primarily because it acts like SWIFT, helping money to be transferred across the world.
litecoin
Litecoin is the one that is closest to Bitcoin in the way it works and is often known as ‘silver’ to Bitcoin’s ‘gold’.
tether
Tether is known as a ‘stable coin’ in that it has ‘tethered’ itself to the dollar. The reason for doing this is to make it less volatile than the other cryptocurrencies and therefore make it more attractive to possible investors and users.
Bitcoin cash
Bitcoin Cash is the product of what is called a ‘hard fork’ in development circles. Essentially a group of developers didn’t like the direction of Bitcoin and came up with a different plan for it. That meant they sort of broke away from the other developers and created something a little different from the original.
libra
Set up by Facebook, Libra hasn’t actually even launched yet but it has been talked about so much it seems as if it has already been around for years!
monero
Monero is a secure, private and untraceable currency that is being produced by a community of developers. It is donation-based and doesn’t seem to have a particularly commercial bias at the moment.
Cryptocurrency exchanges
You can buy and sell cryptocurrencies through specialist exchanges. Like cryptocurrency itself, the exchanges have had a checkered history already. Some have folded without warning, taking people’s money with them.
However there are some that have survived and improved their security levels.
The most well-known one is Coinbase. It isn’t the cheapest one. Their fees are around x. However, it is pretty secure and has been around long enough to trust it.
Once you have got your head around bitcoin – and some of the other cryptocurrencies – and have invested in a few of them, you could consider becoming a bitcoin ‘miner’ and making money by ‘digging up’ bitcoin.
However, it’s not an easy thing to do in this country as it takes a lot of computing power to mine for bitcoin and our energy prices are higher than those in many other parts of the world. Also, as the price of bitcoin is very volatile, the value of the ‘coins’ you manage to get could sometimes be worth a lot less than it cost you to mine them.
Yes you can. In fact, just over a year after bitcoin first started, an IT guy named Laszlo Hanyecz bought two pizzas with bitcoin. He bought them for10,000 bitcoin, which, right now equates to about $190,000. Seriously expensive pizzas!
And that is part of the problem with using bitcoin as currency right now. A lot of people – myself included – don’t want to use the bitcoin (or parts of bitcoin) that they own because their value could go up over the next few years. Why waste appreciating assets on everyday purchases?
However, there are various companies across the world that accept bitcoin. Places like Starbucks and WholeFoods will take them, for example. I have also come across a florist in South Africa and a number of art dealers who take them.
On the whole, ether is only used to buy other alt-coins and services in the cryptocurrency sphere but a growing number of online retailers are now taking them.
Should I invest in Bitcoin or other cryptocurrencies?
You could do. I have!
However, i wouldn’t do put any money in until you have some decent investments in more secure products like pensions, and stock market funds. Cryptocurrencies are very new and very volatile. One day they’re up and the next day they’re down, so you must make sure you have solid investments elsewhere to fall back on.
If you would like to invest in them I suggest you put only a very small percentage of your spare cash there. Make sure it’s money you’re prepared to lose…because there’s a decent possibility that you will lose it!
Jasmine Birtles owns a small amount of Bitcoin, Litecoin, XRP and Ethereum.
With Bitcoin hitting an all-time high this week, major players are reflecting on how far the space has evolved since the previous record set in December 2017.
The bullish case appears to be intact as institutional interest remains elevated for Bitcoin.
Five crypto experts weighed in on its rally, explaining why Bitcoin has room to go higher and how the dollar’s weakness will fuel it further.
Bitcoin, the world’s most popular cryptocurrency, hit an all-time high of $19,857 this week.
Surging interest in the digital token brought its year-to-date gain to 177%. The last record was set in December 2017 when its price reached $19,783.
Here’s what five crypto experts had to say about its recent surge, and why the dollar hitting its lowest point in 2.5 years is good for Bitcoin.
Peter Smith, CEO and co-founder of crypto exchange Blockchain.com
Smith said bitcoin was a “grand experiment” from 2011 to 2014, when some thought it would take over traditional currencies. But between 2014 and 2017, the Blockchain.com team recognized it could work.
“From 2017 and onwards, Bitcoin’s become inevitable. Bet on Bitcoin’s inevitability,” he said.
Paolo Ardoino, CTO at crypto exchange Bitfinex
“No amount of cynicism, disbelief or even fantastical thinking can obscure the compelling case for Bitcoin,” he said. “Global asset managers will continue to recalibrate their portfolios accordingly.”
The dollar index, a measure of the US dollar against a basket of six currencies, was trading at a two-and-a-half year low this week. Positive news on COVID-19 vaccine development has raised hopes of a swift economic recovery and eroded safe-haven demand for the dollar. Congressional Democrats coming out in favor of a $908 billion stimulus package may also weigh on the US currency.
Webull CEO Denier believes a weak dollar is good for Bitcoin because the Fed’s policy of printing money, thereby devaluing the dollar, will make people use the token as a haven from inflation.
“If people are pulling money out of gold and putting it into Bitcoin, that could give more fuel for the Bitcoin rally,” he said.
Simon Peters, analyst at multi-asset investment platform eToro
Peters said eToro saw a 66% increase in the number of people holding a Bitcoin position on its platform in November, compared with the last time it hit an all-time high in December 2017.
He pointed to some indicators that suggest Bitcoin could go higher still.
“If we maintain the current rise, then $25,000 before the start of 2021 is on the cards,” he said. “There will be some selling at $20,000, and this could see a short move backwards. But if bitcoin shrugs off this selling and continues rising, then New Year’s Eve at $25,000 is there for the taking.”
Glen Goodman, author of bestselling book ‘The Crypto Trader’
Although Bitcoin has doubled in price in just a couple of months, it could easily fall just as fast as it did after the last boom, according to Goodman.
“All the talk of ‘Tulip Mania’ in the 2017 boom is absent now. Once the historic Dutch tulip bubble burst it never recovered, while Bitcoin has now shown it has real staying power,” he said.
The author, who is a contributing expert on cryptocurrency at the London School of Economics, said the “Maisie Williams Indicator” is a great gauge to measure where the level of interest lies.
The Game of Thrones star recently conducted a poll on whether she should buy Bitcoin. Most of the million voters said no, but at the peak of the last Bitcoin boom, most voters in a CNBC twitter poll said yes to Bitcoin at precisely the wrong time, Goodman noted.
“The lesson is: whatever the herd’s doing, it often makes sense to do the opposite,” he said.