Global Tech Exits Report Encourages Venture Capitalists

“Bitcoin has little to offer to a wider audience, and will likely return to being a niche product for a select group of enthusiasts,” Teunis Brosens, of the banking giant ING, wrote. “One day, beyond the hype, Bitcoin will return to being the niche product that it was in its initial years. Users will include tech nerds, people obsessed about their privacy, people afraid for (hyper)inflation in traditional currencies, and people wanting to circumvent central banks for ideological or criminal reasons.”

In a report, ING argues that Bitcoins will fail to break into mainstream due to the lack of complexity with the Bitcoin’s tech.

As more people venture in the Bitcoin market, more transactions take place. Unfortunately, it seems Bitcoin cannot handle the demand. “Currently, Bitcoin is able to process about 7 transactions per second,” Brosens writes. “For Bitcoin to play a meaningful role as a payment system, the transaction processing power needs to be a 100, maybe even a 1000 times better.”

On a global scale, no ordinary person would appreciate the volatility of Bitcoin. Brosens wrote: "A world in which your money buys you a large latte today, but only a small espresso tomorrow, is hardly convenient."

Bitcoin is famous for its wild price swings. For example, on Nov 28, 2017, A single Bitcoin is valued at $9329.00. As of now, December 28, 2017, it’s valued at $14,311.00 -- approximately 153.40% of its price a month ago. So for Bitcoin to sway 10% to 20% of its previous price, is not surprising to say the least.

“Bitcoin’s high-value today is based on shaky foundations,” he wrote. “The only justification for investing in bitcoin today is the assumption that others are willing to buy bitcoin at higher prices in the future.”

He argues that speculation has a lot to do with the rapid price gain. The argument has been further enforced by enthusiasts encouraging fellow Bitcoin owners to “HODL” on their shares. Brosens writes: “You will find people (often invested in bitcoin themselves) arguing that buy-and-hold is the Bitcoin strategy to use. Oh and please don’t sell but do hold, because otherwise, you’re spoiling it for everyone else. If that indeed is today’s dominant Bitcoin application, then it has drifted far from the goal Nakamoto (Satoshi, Bitcoin Founder) had in mind in 2008.”

In describing many Bitcoin investors and capitalists in 2017, he writes: “don’t really understand the basics and original goals and ideals of cryptocurrencies, and don’t care much either.”

On the subject whether Bitcoin is overvalued, Brosens wrote: “A niche asset adopted worldwide could still have a substantial user base and hence value. It is therefore impossible to say whether the current bitcoin market price is ‘too high’ for a niche asset.”

“Then again, we join the crowd of analysts observing typical bubble characteristics: the idea of an asset that is new, revolutionary, almost magic – hard to understand, but let’s invest anyway because it will become huge. This idea is a form of ‘this time is different’-thinking. Yes we know about all those previous bubbles that popped, but Bitcoin is really, really different. We are not so sure.”

Brosens carefully differentiates his dislike for Bitcoin with his thoughts for the blockchain technology, which is the basis for Bitcoin. “The blockchain is a great technology and may bring progress to a variety of fields, ranging from finance to healthcare, and from notary to voting,” Brosens said. “Long live the blockchain.”

As the year exits, it is best to stay observant as we are yet to predict the wild ebb and flow of cryptocurrency, nor the fundamental purpose and objective of it all.