To the moon…prices are going to the moon.
So bitcoin rose to $1,000 again…for a few days. The last bitcoin rally to the $1,000 price was down to one major bitcoin exchange MTGOX. MTGOX served as a major on and off ramp bottleneck for buyers and sellers. You see MTGOX had lost over $500 Million worth of customer coins to a sophisticated hack. Its banking capabilities were limited if not disabled. The only way to get your money out of MTGOX was to buy bitcoin because you would not see a cash wire in any reasonable time. This forced prices up of course, especially given that the troubled exchange controlled a significant majority of the market volume. I am not a journalist, so click here for more details on the collapse.
Why has bitcoin risen again to this price of $1,000? The magic answer to this question is I am constantly being asked for. News reporters, previous investors and potential all want to know.
Although one could point to some similarities in the rise to $1,000 in 2013 and the rise we see today, namely its aggressive and sudden spike, there are major important structural differences available today that were not present then.
· There are more exchanges today offering liquidity with no single point of failure.
· We have had multiple exchange hacks and coin losses that have not had the same detrimental effects as the MTGOX induced bitcoin price crash of 2014.
· Prominent bitcoin exchanges are amongst the best funded in the blockchain space. Coinbase, a major exchange for example has raised $117 million to date.
While analysis on bitcoin price fluctuations is important, we should not lose focus of what bitcoin signifies.
· Unimpeded transfer of value from one person to another
· Railway for remittance
· A valuable tool for evading capital controls.
Whilst for the remittance story, the transaction fees need to come way down, the capital flight story is very much a reality and is here today.
Bitcoins are sometimes viewed as a threat to governments because of its much publicized use for illicit transactions . Whilst I would not agree or disagree with any of those remarks, one must also be cognizant of the strong potential that bitcoin has for the people.
Governments need find a way to work with the technology and not against it. Let us not choke innovation to death but learn to use it to our advantage. The sorts of projects that presses transitioning bureaucratic governments towards innovative new technologies excite me. They are a way for governments to shoot for the moon.
Baba Bitcoin 