Are You Missing The Hottest Investment On The Planet Right Now?

I remember hearing about bitcoin for the first time about four years ago when there was news that someone used the digital currency to buy a Tesla Model S for $103,000 which was the equivalent of 91.4 bitcoins. That buyer may have a bit of remorse because if he held on to his digital currency, it would be worth roughly $260k today. This year the cryptocurrency is up 193% and it is up almost 4x in the last year. It has become one of the hottest investments of 2017. Now the question is: should you be a buyer or is it a bubble?

Bitcoin explained

Bitcoin is a digital currency invented by an unknown programmer under the name Satoshi Nakamoto. The system is peer-to-peer, and transactions take place between users directly without an intermediary like in a credit card purchase. These digital transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Here is a short video primer by the Guardian.

The bulls: disruptor

The most prominent believer in bitcoin is the co-founder of Netscape Marc Andreessen who has touted the technology for several years now and has $50 million invested in bitcoin startups. It is important to note that he is investing in companies that are building the services around the digital currency like exchanges and transactional companies and he is invested minimally in the digital currency itself. This is a key distinction to recognize as he is clearly a huge proponent of blockchain as he believes it is a truly disruptive technology. With bitcoin, he believes that it can begin to provide real value to merchants and consumers because it provides a solution to pain points like credit card fraud, high transaction fees and chargebacks. He wrote a long editorial piece in the NY Times called Why Bitcoin Matters back in 2014 that is worth a few minutes of your time.

Jeremy Liew, the first investor in Snapchat, and Peter Smith, CEO and co-founder of Blockchain, are huge bulls on bitcoin and recently laid out their case for the currency to explode to $case by 2030. Like Andreessen, their primary case is on remittance transfers, or electronic money transfers to foreign countries, which have almost doubled over the past 15 years to 0.76% of gross world product. Financial companies often charge 10% for such transactions which would drop to close to zero with bitcoin.