BTC what is the future: Bloomberg special report
Bitcoin Growing Pains: Matching Reality to the Rhetoric
Bloomberg has released the latest edition in its Bloomberg Briefs series, in the form of a special report dealing solely with Bitcoin and its future.
The series, which Bloomberg claims circulates to over 300 thousand subscribers, features opinion from industry figures along with limited editorial content and informational data.
‘Bitcoin: What is the Future?’ is no different, drawing on the expertise from a group of well-known names in cryptocurrency on issues ranging from regulation to price and value. Bitcoin’s status as an investment and currency are debated separately, with Bloomberg’s Noah Smith offering his take on Bitcoin’s mainstream entry hurdles, writing:
“The sooner people give up the hope that bitcoin will skyrocket in price, the sooner they will be willing to spend bitcoins in everyday life, the way they now spend dollars.”
He also agreed with the view of Washington Post journalist Matt O’Brien who labeled Bitcoin “a Ponzi scheme for redistributing wealth from one libertarian to another.”
“At least, that’s all it is right now,” O’Brien had added, which Smith corroborated, explaining, “The reason for bitcoin’s wild price volatility is that many people … fail to understand the difference between money and risky long-term assets.”
Smith’s editorial failed to win over commentators, who criticized his “rhetoric” and called for a “more sophisticated analysis.” The report is nonetheless conspicuous in its relative lack of editorial content, relying instead on more direct input and interviews from industry figures. Also notable is the absence of banking sector opinion, lending the report a different angle to the periodicals published by CoinDesk which deal with similar themes.
Instead, Bloomberg concentrates on highlighting activities of Bitcoin traders themselves, including Wedbush Securities’ Gil Luria, a regular pundit on Bitcoin investment, as well as educators such as Jerry Brito of Coin Center.
“The Internet has removed middlemen and bottlenecks all over the place, but not yet for money,” Luria commented when asked about Bitcoin’s future. “I think that’s going to change.”
Bloomberg has traditionally offered an open platform to Bitcoin discussion, with notable events including a November 2014 conference, during which Commodity Futures Trading Commission Commissioner Mark Wetjen stated he considered the organization to have “authority over Bitcoin price manipulation.”
In April 2014, Bloomberg added Bitcoin to its market index.
http://cointelegraph.com/news/114329/bloomberg-report-points-finger-at-hoarders-for-bitcoins-low-price
Bitcoin introduced a lot of people to the idea of computerized money. Now the digital
currency, which set off a minor frenzy when it broke into public consciousness in 2013, is
trying to grow up.
Novelty has given way to the hard slog of starting and funding new companies, like
brokerages and bitcoin storage sites, that can be boring and profitable. Utopian fantasies
have subsided as consumers remain largely unconvinced of the value of swapping their
cash for bitcoins, or using it to buy goods and services or for transferring money.
There are plenty of people in Silicon Valley, Wall Street and other tech or money hubs
around the world working on it, but no definitive answers are in sight. With price swings
that have shown that owning bitcoins isn’t a sure path to riches — the currency lost half
its value over the course of 2014, a worse showing than the ruble — you have to believe
in the brainpower invested in bitcoins if you want to believe that the reality will eventually
match the rhetoric.
Even as entrepreneurs look for new business models, the bitcoin community has been
working through some legacy issues, like the 2013 indictment of the operator of Silk
Road, an anything-goes online market where drugs were peddled for bitcoins, or the
bankruptcy filing by Mt. Gox, a Tokyo-based exchange, after hackers pilfered 850,000
bitcoins.
Regulators are proving to be a bigger challenge than many entrepreneurs had hoped.
Benjamin Lawsky, the outgoing New York state superintendent of financial services,
proposed rules on digital currency companies that drew often-unprintable reactions from
bitcoin entrepreneurs before being scaled back. European banks were warned against
handling bitcoins until new EU regulations take effect. The U.S. Internal Revenue
Service ruled that bitcoins would be treated as property, not currency — meaning that
buying a $2 cup of coffee with bitcoin you bought for $1 could trigger a capital gains tax.
And the Bitcoin Foundation is fighting an internal battle over whether supporters should
focus on advocacy or improving the software that makes transactions in the currency
possible.
Virtual currencies aren’t new — online fantasy games have long used them — but the
development of a secure digital currency without a central issuer rightly turned heads.
The pseudonymous creator of the bitcoin system, Satoshi Nakamoto, solved a problem
central to any currency: how to control its issuance, i.e., prevent counterfeiting. He also
solved one specific hurdle for digital money — how to stop users from spending the
same unit of currency twice. His breakthrough idea involves an online ledger that records
every single bitcoin transaction, one maintained by a network of bitcoin “miners” whose
computers perform the calculations that validate each transaction, preventing
double-spending.
The miners earn a reward of newly issued bitcoin. The pace of creation is limited, and
no more than 21 million bitcoins will ever be issued. Bitcoins can be used to buy an
ever-expanding list of things, including a Tesla sports car. That’s still a fraction of the fiat
currency economy, but a band of well-funded startups with names like Coinbase, BitPay,
Xapo and BitGo are making it easier to exchange and store bitcoins safely.
A bitcoin boom early in 2014 led some to call it a bubble with no intrinsic value. But
entrepreneurs in the field say that focusing on the price of bitcoins is missing the point —
the currency’s value is as the basis of a new kind of payment system.
Dreams of replacing the dollar aside, putting bitcoins to work is a matter of applying
enough time and money, they say. Convincing applications of the bitcoin system include
moving money abroad and as a medium for micro-payments in emerging countries.
Tim Draper, a legendary Silicon Valley venture capitalist, bought about 30,000 bitcoins
from the U.S. government (they had been seized from Silk Road) and aims to help
people break free from weak local currencies. But even some of the currency’s canniest
boosters realize there is no guarantee that bitcoin ever will break into the monetary
mainstream.
Mike Hearn, a member of the core team that updates the bitcoin software, said that the
“most plausible outcome” is that it retains only a niche appeal.
— Carter Dougherty, Bloomberg News
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