Everything You Should Know About Bitcoin Mania
The People’s Bank of China stated that Bitcoin is no real currency and this statement dropped the Bitcoin rate by 14%. Is Bitcoin mania over now?
Until today the virtual currency was skyrocketing. The Bitcoin value was $103,85 at the beginning of October 2013, but peeked to $1.250 in December 2013.
When the Chinese Central Bank refused to accept Bitcoin as official currency, the rate dropped by 14% to $974.
To confuse you even more, Bank of America Merrill Lynch said yes to Bitcoin recently.
So let’s take a deep dive and discover all about Bitcoin mania in this story.
Winklevoss Twins: From The Facebook to Bitcoin
Remember the Winklevoss twins from the movie The Social Network? They are major investors in Bitcoin after becoming wealthy from their break-up with Facebook founder Mark Zuckerberg.
The twins recently told CNBC at the Dealbook conference in New York that a $400 billion market cap for BTC would be a “small bull case scenario”. Is there a reason why Tyler Winklevoss and Cameron Winklevoss of Winklevoss Capital, want Bitcoin to be gold 2.0?
Sure there is. The twins have a vested interest in Bitcoin’s growing popularity, as is obvious by their reported investment of somewhere in the neighborhood of 108,000 BTC. That would be worth around $37M at a recent CoinDesk BPI valuation.
The twins believe that Bitcoin has some similar values to gold, an asset that many investors buy because they lack faith in the US dollar. “Some people definitely view it as Gold 2.0,” Tyler Winklevoss told CNBC.
What is Bitcoin Mining?
I will try to keep it clear, stupid and simple. Bitcoin is running based on an algorithm. Users with sufficient hardware and power can create “new coins”. This is called mining.
But be aware, fact is that most Bitcoin users don’t mine. People that want to get Bitcoin based on a fixed amount of mining power, but don’t want to run the actual hardware themselves, can purchase a mining contract.
If you are a freak, nerd or cyber spy, you can read the mining and the tech stack details in this Bitcoin Mining Guide. My suggestion? Skip the info.
More important is to understand the commercial Bitcoin mechanism, rather than knowing the techy background.
The Bitcoin algorithm was created by the anonymous programmer under the pseudonym of Satoshi Nakamoto. And this story may appeal to the imagination of gold seekers.
The total Bitcoin currency today exists of 11 million Bitcoins. But that number is steadily growing because new coins are being created. That process is slowing down, until in 2040 the maximum number of 21 million Bitcoins is achieved.
But is Bitcoin indeed gold 2.0?
What Do The Banks Say About Bitcoin?
The People’s Bank of China is very clear about Bitcoin: no official currency. I don’t know if the background of this statement is related to communism of censorship?
We are all aware that the Chinese government is blocking the Western WWW by its firewalls and that freedom of speech in social media is being monitored as well.
More strange is that Bank of America is very positive about Bitcoin. Is that optimism related to capitalism or liberalism?
We are all aware that the greed from Wall Street unlocked Enron and Lehman Brothers alike bad practices.
The Bank of America recently stated that Bitcoin could indeed become an important currency, as you can read in this report about Bitcoin by the Bank of America – Merrill Lynch.
So before I go to my opinion, it’s important that you have seen all the facts.
I am stuck between the Chinese Bank and the Bank of America. But the facts is that Bitcoin is money without central banks. An unattended currency without government interference.
And I hate to be the bearer of bad news folks, but there’s some unseemly strange stuff happening around Bitcoin.
My gut feeling based on my extended experience in this industry, tells me you should stay out of Bitcoin.
I don’t think Bitcoin is going to be gold 2.0 in the long run. So I think you should stay out.
Next about the Winklevoss twins.
I do not always understand why so many in our industry are not so thrilled about the Winklevoss twins. I am using an understatement here to rephrase “persona non grata”, in Latin an unwelcome person.
Maybe somebody could explain that negative sentiment to our audience?
What About You?
What is your opinion on Bitcoin? How do you feel about the Winklevoss twins?
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About the Author
Igor Beuker is a serial entrepreneur, acclaimed trendwatcher & speaker, marketing consultant and advisory board member at several disruptive media, technology and entertainment firms. Book Igor as keynote speaker, follow Igor on Twitter or contact him via LinkedIn.