The word Bitcoin has often been associated with drug dealings and other nefarious activities where anonymity is important. Some pundits believe Bitcoin may fizzle, although they like the Blockchain technology which provides the infrastructure for Bitcoin and other crypto currencies. I am bullish on blockchain also, but feel Bitcoin may have a long life ahead too. The price of Bitcoin has been rising of late, and Fortune believes there are three reasons (See 3 Reasons Bitcoin Is Booming Again).
The first reason is technical and has to do with the thousands of servers around the world which keep track of the Bitcoin ledger on the blockchain. The second reason Fortune reported has to do with Ethereum, a public blockchain platform which offers an alternative to Bitcoin. The theory, unproven so far, is the rise of a potentially improved digital currency with Ethereum will add to the legitimacy of Bitcoin. The third reason is China, where investors are moving money among various asset classes, including Bitcoin. This may or may not be a permanent shift.
Like the early days of the Internet, Bitcoin is in the very early stage of development. Blockchain, as discussed in last week’s e-brief, looks like a sure thing for many important areas including finance and voting. Bitcoin is less certain, but I continue to believe the non-U.S. consumer world will continue to welcome the digital currency. Stay tuned.