Bitcoin was only 0.0001 USD on June 2009; after that, the price of Bitcoin rose to 0.07 USD a year later. During that time I heard the name "Bitcoin," but lazily disregarded it as a derivative of PayPal. Earlier this year, probably late to the party, I heard about Bitcoin again at a local poker game; then, the price of one Bitcoin was ~3,000 USD. I immediately headed home to do my research.
Now the price of Bitcoin is 3,283.79 USD, slumping down from a high of almost 5,000 USD. This downward may be partially due to business heavyweights like Jamie Dimon calling Bitcoin a fraud. In the article, "Jamie Dimon Slams Bitcoin as a 'Fraud,'" Jamie Dimon said that he would fire any employee trading Bitcoin for being 'stupid.'
The cryptocurrency "won't end well," he told an investor conference in New York on Tuesday, predicting it will eventually blow up. "It's a fraud" and "worse than tulip bulbs."
In bitcoin's case, Dimon said he's skeptical authorities will allow a currency to exist without state oversight, especially if something goes wrong. "Someone's going to get killed and then the government's going to come down," he said. "You just saw in China, governments like to control their money supply."
Moreover, the co-founder of Oaktree Capital Management Howard Marks, another business heavyweight, questioned Bitcoin's intrinsic value,
In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.
I, too, was mainly skeptical of Bitcoin at first, because I couldn't find the intrinsic value of Bitcoin; but I was further encouraged by Bill Gates, a nongambler, who had encouraging words towards Bitcoin.
The YouTube video can be found here:
In my opinion Bitcoin is not a medium of value exchange yet; however, I believe Bitcoin has a bright future because of network effects. When more and more people have it and use it, Bitcoin will become a common medium of value exchange therefore making it very hard if not impossible for governments to crack down on Bitcoin in a major way. That is if they implement a rule too late in the game.
Still, Bitcoin is prone to risks. The major risk is still government and the fact that Bitcoin is making financing illegal activities easier.
Another risk is that another cryptocurrency will overtake Bitcoin, and thus, will render Bitcoin worthless. I would not advocate in investing outside of Bitcoin and Ethereum because other lesser known cryptocurrencies like penny stocks will likely see their value go down to zero.
What are your thoughts? Do you think Bitcoin as it goes further down in price, will be a good investment for the future? Will Ethereum overtake Bitcoin in market capitalization? Are you a current investor in cryptocurrencies?