Since the announcement this week that the peer-to-peer decentralized digital currency bitcoin was going to have its very first United States-based exchange platform, the value of the cryptocurrency slightly rebounded and is now trading at around the $250 mark.
It is quite apparent that bitcoin has lost much of its momentum in terms of value since it reached its all-time high of about $1,200 in Nov. 2013. The price of the virtual currency continues to be depressed, even though thousands of big-name merchants and non-profit organizations are adopting the technology, including Dell, Overstock, Wikipedia, a few Subway franchises and Expedia.
Much of the blame for this massive decline is attributed to two factors: merchants are immediately converting their bitcoins into dollars and the paucity of secure apparatuses.
Despite all of this, a duo of investors see the bitcoin industry exploding to $1 trillion.
The Winklevoss twins say the virtual currency is the payment system of the future. Soon, they believe bitcoin could maintain a market capitalization of $400 billion, or the combined value of today’s payment companies, like Visa or MasterCard. However, if bitcoin can transform into an asset class similar to gold then it could very well soar to $1 trillion.
“If Bitcoin is a better gold or seen as a type of gold-like asset, then it could be in the trillions on a market cap,” Tyler Winklevoss told CNNMoney. “We do feel those are very real possibilities.”
The Winklevosses remain unconcerned about the price decline, too, because they feel it’s a lucrative buying opportunity in the same way that the yellow metal’s lackluster performance in the last two years is a buying opportunity.
“It’s a buying opportunity. We’ve never sold a Bitcoin. We’re in it for the long haul,” Cameron Winklevoss said. “People get fixated on the cost. It’s going to have lots of gyrations, but it’s new and you have to bear with it.”
Many are dismissing this prediction because the cryptocurrency business is only valued at an estimated $4 billion, though the number of venture capital funding pouring into the sector continues to grow exponentially.
Also, some of its critics point to the number of regulations that are being imposed upon the bitcoin industry, which its early adopters say couldn’t have happened because it’s an anonymous form of currency. Detractors continually warn about government tracking its users and infiltrating the system.
Time will certainly tell if bitcoin will eventually exceed $1 trillion in value.
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