Are People Underestimating The Potential Of Bitcoin?

Are People Underestimating The Potential Of Bitcoin?

Cryptocurrencies are disrupting the way startups raise money and the way some financial transactions are handled.

Some skeptics, like billionaire venture capitalist Peter “The Gawker Killer” Thiel, are starting to come around, or at least to admit that there may be something to at least one cryptocurrency as a next-generation currency.

A founder of PayPal, Thiel is no stranger to disruptive payment systems. He said he is skeptical of most cryptocurrencies except bitcoin. Comparing bitcoin to gold, Thiel said people are underestimating it, and it has “great potential left,” CNBC reported. Thiel spoke at the Future Investment Initiative in Riyadh, Saudi Arabia.

“Bitcoin is mineable like gold, it’s hard to mine, it’s actually harder to mine than gold. And so in that sense it’s more constrained,” Thiel said.

Just 21 million bitcoin will be mined, making the supply limited.

Goldman Sachs is considering trading in bitcoin and other digital currencies. JPMorgan Chase CEO Jamie Dimon called bitcoin a novelty, fraudulent and “worth nothing,” but he said he admires the blockchain technology underpinning it.

On the other hand, former hedge fund manager Michael Novogratz said bitcoin would head to $10,000. Forty-nine percent of the 23,118 people who voted in an unscientific CNBC survey said bitcoin was heading above $10,000.

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People are buying real estate with bitcoin in cities that allow it — a departure from tradition, but one that is quickly gaining momentum thanks to the global reach of the cryptocurrency, according to Coin Telegraph:

“Miami is an ideal market for Bitcoin. (Realtors) cite the worldwide reach of Bitcoin as a primary factor in driving increased interest and attention to the region. Using an alternate form of currency opens up properties to buyers and investors from all over the world, including Asia, Canada, South America and more.”

Bitcoin presents a $1.6 billion revenue opportunity for exchanges, according to a cryptocurrencies report by Bank of America Merrill Lynch, Business Insider reported.

Cboe, the largest options exchange in the U.S. and a first mover in cryptocurrencies, appears the best positioned to capitalize on the opportunity, according to the bank.

Chicago-based Cboe has partnered with Gemini, a digital assets exchange started by Tyler and Cameron Winklevoss, to roll out bitcoin futures and bitcoin-linked products, possibly this year. Futures are contracts that allow two parties to exchange an asset at a specified price at an agreed upon date in the future. Cboe is also looking to list a bitcoin exchange-traded fund.

Bank of America based the $1.6 billion bitcoin revenue figure on the assumption that cryptocurrency volumes end up at about 10 percent of current fiat currency trading volumes, according to Business Insider.

Bitcoin has grown in value by more than 400 percent this year. Since January, the market for cryptocurrencies has skyrocketed from $17 billion to $170 billion. Volumes per day for bitcoin are up from $57 million at the beginning of the year to $628 million, according to Blockchain.info.

“Like it or not, people want exposure to bitcoin,” said Cboe chairman and CEO Edward Tilly a recent conference.

Why do people like crypto?

It has the potential to disrupt the way startups raise money or how certain financial transactions are handled, experts say.

Investors want a piece of the virtual market based on potential uses that have yet to materialize, says Garrick Hileman, a research fellow at the Cambridge Center for Alternative Finance in a Washington Post report.