As we close out a tempestuous 2015 in the “real world” of increasing political and economic discord, it has largely escaped notice outside of a few small, highly technical circles that 2015 was indeed a tremendous year for bitcoin, its underlying blockchain technologies and numerous new initiatives to expand upon this already highly disruptive set of technologies we can group together as digital assets.
The world of digital assets
First, a word about digital assets. The term has been floating around the digital currency space for quite some time, but it seemed to pick up steam as the superior phrase during the recent Money 20/20 conference in Las Vegas (a payments confab where bankers outnumbered bitcoiners at least ten to one), as it’s frankly a better phrase than cryptocurrency to describe the group of technologically created elements as (a) they don’t all act like currency – in fact, the point of the “private blockchain” is to use the underlying technology as software with no economic incentives to establish consensus, which is a hallmark of bitcoin, the original blockchain, and (b) it helps to clarify the narrative that what all of these things have in common is that they are indeed assets and not just files – they cannot be duplicated, yet they retain most of their other digital properties, allowing for global dissemination and secure storage.
Let’s start with why this was a banner year for bitcoin. First, the price. It would appear that the two-year bear market in Bitcoin as a tradeable commodity has passed (like the stock market, oil futures, pork bellies and anything else that has value and trades globally, these cycles will continue, of course). The early January low price on Bitstamp (the most quoted exchange) was $151, yet by late November the price had run up to a brief peak of $500 before settling back into the low $400s at the end of December.
Yes, like with any other asset, some people may have bought at the 2013 market top and not yet recovered (the same can be said, for example, of people who bought homes in 2007 or Yahoo! in 1999). Yet, those who showed courage and have a long-term window of investing (at least 3-5 years) have already near doubled their investment from even average Q1 prices.
Just as important for bitcoin (freshly celebrating the seventh year of its Genesis Block) has been its ability to come to consensus – through two Scaling Bitcoin conferences where the large miners who effectively run the decentralized payment processing that allows bitcoin to run so well have more or less hashed out (pun intended) their differences and now seem ready to let the volume expand in an orderly manner. And growing is exactly what it has done: the daily number of actual transactions in bitcoin is roughly 1,000 times higher today than it was six years ago and three times as high as the November 2013 “bitcoin bull market” peak. Just as the 2001 dot-com meltdown left doubters that Internet advertising could ever become a sustainable business model (a prediction proven incredibly shortsighted by the successes of Google and Facebook), those who believe Bitcoin values will never again see $1,000 will most likely be proven wrong, perhaps by an order of magnitude over time.
Third, the amount of venture capital investment into bitcoin and blockchain startups (a word on blockchain shortly) continues to grow, with total investment now over $1 billion into the sector, up from a total of $2 million in 2012. And the variety of what has secured funding is remarkable: the same year that saw at least 35 major banks invest in companies to create private blockchains (essentially, copies of the open-source bitcoin code modified to have consensus controlled by a smaller number of internal trusted sources – think Internet vs intranet) also saw more than $5 million invested via a crowdsale in a decentralized prediction market (including betting) called Augur and the long-awaited debut of the open-source bitcoin alternative standard, Ethereum (after raising $18 million in mid-2014 in its own record-setting crypto crowdsale).
Additionally, consumer uses for bitcoin domestically (like Gyft, now part of public company First Data, which allows giftcards from hundreds of retailers to be purchased at a discount using Bitcoin, and Purse.io, which allows discounts of 20 percent or higher on anything on Amazon.com through a unique marketplace of Amazon credits that can be purchased globally with Bitcoin) are beginning to not only launch, but flourish.
My Las Vegas incubator, bCommerce Labs, is preparing to launch its first consumer product, CryptoMarket, an online marketplace using only bitcoin and other digital assets to buy the same kind of products sellers put on eBay or Etsy. We are also hard at work on developing digital assets to empower consumers in a variety of e-commerce avenues, from facilitating barter on the blockchain to creating tokens for various consumer applications which will be far more efficient and secure through the creation of a digital asset and tracking on a blockchain. We were also involved in the creation and launch of Voxelus, the first in-game cryptocurrency backed by a large marketplace of VR assets.
Yes, whatever you want to call it – blockchain, cryptocurrency, bitcoin and its derivatives – or, as we prefer, digital assets, 2015 was a watershed year and the trendline is such that, all things considered, 2016 should see further innovation, adoption, innovation and value creation.
- By Michael Terpin, BitAngels/Transform Group
Michael Terpin co-founded the first global angel group for bitcoin, blockchain and digital asset investments, BitAngels (www.bitangels.co), in early 2013. He also runs the bCommerce Labs digital asset incubator fund in Las Vegas, and is CEO of Transform Group (www.transform.pr), the leading PR firm in the bitcoin sector, which recently started up its Coinovate blockchain consulting and strategy division. Terpin is moderating the first-ever bitcoin/blockchain panel at this week’s tech mega-conference CES as part of the CES Digital Money Forum (www.digitalmoneyforum.com).
Disclosure: Terpin is an investor in Purse.io and bCommerce Labs, and Transform Group has represented Augur, Gyft and Voxelus.
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