On July 15th bitcoin was trading at $1,999, with the news being that there was a split in the direction that the people working within the digital community of how the cryptocurrency was going to move forward.
This morning it is trading at an all-time high of $3,392. It rose $70 by the time I wrote the paragraphs below this one. The question is why?
How can I rationalize telling people to get into BTC, if I have no idea what the price will be in 12 hours, or two hours from now?
Understand that this is so new that 99% of Americans have no idea what I am talking about. And if they heard about BTC, 99% of them do not know how to buy it.
So with that said and according to the bitcoin white paper that roughly 70% of the 21 million bitcoins that will be created are in the marketplace, what the driving force behind the price discovery?
It’s not like buying Apple at $0.21 a share in 1982, based on the idea they have a magical box called Lisa. The reason being they had a box and how well the box was received would determine the price.
Bitcoin has the utopian premise that it is outside the dollar hegemony, yet it is priced in dollars and all other currencies. It has the full-faith and credit of the code behind it, which means it is not legal tender for all debts public and private.
How can you turn any profit into a purchase, since most retailers will not accept bitcoin because the transfer of the transaction could take days sometimes. So if you buy something worth $4,000 with a BTC on Moday and the price crashes on Tuesday, the retailer is out.
Listen I have dabbled in it, just like I did in Apple in the early 80’s, because I’m into those type of things and am not complaining about the run up in price of either investment.
However, telling someone this is a good investment and you should get in, is another thing entirely.
These are heady times for all cryptos, and a year from now I could be laughing at this post as the price hits $10,000 or maybe $1,000. I have no way of knowing which outcome is more likely, since I have no way of modeling the price movements.
I will say this about BTC. If someone builds a better and easier way to purchase BTC, without needing to be a computer whiz of finding a digital wallet and yada, yada, yada, that would go a long way of bringing more people into the pool.