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Bitcoin / BTC Price And The Future Of Futures

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Bitcoin’s slip in value is nothing to worry about, according to most investment experts. Its value dropped 3.9% on Wednesday, in response to the deployment of SegWit, but those in the know see this as a minor deviation that will have negligible impact on its true destiny of reaching a BTC price of $5,000 or even $100,000 within five years.

Those are big numbers, and they are being prognosticated by people who know the markets. Speaking with BusinessInsider.com, Arthur Hayes, CEO of BitMEX, expressed satisfaction with the activation of SegWit, seeing it as a solution that helps put the $5,000 BTC price within striking distance.”  Dennis Porto, who is both a bitcoin investor and an academic at Harvard, is quoted in the same article as suggesting that the BTC price is following Moore’s Law, doubling every eight months as a factor of usage. As such, he sees the it reaching $100,000 by February 2021.

Moore’s Law was coined in 1965 by Gordon Moore, co-founder of Intel. He used it to note how the number of transistors per square inch on integrated circuits was doubling every year. This is significant, since, at the time he made this observation, transistors were only just coming into use, and the general reaction from consumers and from the markets was, “what are they good for?” This is where many people are today with Bitcoin and Ethereum.

Moore’s Law later demonstrated itself with fax machines and later email and web pages – useless, when there’s only one, but growing more useful logarithmically as more people use them.

As virtual currencies and blockchain technologies mature, more and more people, organizations, companies, and governments join in, and consequently its value grows as a square of the number of users.

This usage has the potential to transform into the underlying value of the currency itself. Many who doubt the validity of cryptocurrencies point to its lack of intrinsic value, yet that value is growing in the traditional manner of monies – a universal accepted faith, translating into a calculable equivalency for trade.

The $100,000 BTC price mark is symbolically powerful, of course, yet it still begs the question of where the permanent plateau will happen. Without one, it will remain difficult for merchants to accept bitcoins as electronic cash, knowing that its value might rise or fall by 10% or more in a matter of minutes.

Some retailers around the world already accept Bitcoin, but they do so on a spot market basis, exchanging the bitcoins for their own currency within seconds of acceptance. Some might say that demotes the status of Bitcoin to a mere novelty version of money, since it cannot stand on its own. Others will say the transaction is on par with any other foreign currencies that retailers might accept at the day’s exchange rate.

Volatility is the problem that leads to the question, “Why can’t Bitcoin be purchased on a futures market like oil?” Oil also has an issue with volatility, as can be seen every time a major refinery catches fire, or an oil producing nation decides to turn the taps off. But with oil and other commodities, futures are based on a delivery of tangible product, like an actual barrel of oil or bushel of wheat. With Bitcoin, there are no actual coins, there is simply the value of those coins, agreed upon by its users and miners, and based on faith paired with scarcity.

Also, in concert with the overall amorphous infancy of cryptocurrency, there are already numerous futures exchanges in operation, each operating by their own rules, and with no regulatory oversight. They operate independently, with little or no cross-business.

Proponents of Bitcoin may be cheering as they observe their currency clear one technological hurdle after another. For unlike speculators and opportunists, they actively believe in the currency, both in theory and in practice. But the constant climb in value, punctuated by the odd dip as happened Wednesday, means that as successful as it is becoming, the BTC price has not reached a point of predictability, which is something fiat currencies can attest to.

The futures market will likely grow and gel into something globally useable, but it, too may have to go through a fork or two to peel away the variances and emerge with a (mostly) universally accepted platform that remains true to both the “ownerless” status of cryptocurrencies, as well as something regulated and reliable. That’s a tall order.

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