Bitcoin Value After 1 Year

A whole year has passed since getting involved in cryptocurrency and I find myself reflecting on “bitcoin value” and what it means to me personally. The year has literally flown by as what can only be described as the roller-coaster ride promised!  Obviously, the price plays a role in my own bitcoin value assessment – I bought my first last Feb 13th for $996.  I was cautious because it seemed like a lot of money to spend on something that, at the time, I knew little about. A good friend/colleague/partner in online ventures called and said: “Pam, we need to take a look at this…”

We were both a little skeptical because a recent MLM venture into which we had put a great deal of time and effort was not living up to expectations. Thankfully, we didn’t let that experience deter us from a new opportunity. Instead, we learned things and plowed forward into the crypto-world better armed.  We’d both heard about bitcoin and, being in the biz of web development and digital marketing, it quickly became apparent the time to jump into this space was “now”. Of course, in hindsight, I regret it took us so long…but hindsight is 20/20, just like they say. We both set out to make up for not paying more attention to cryptocurrency until now.

I have developed a habit of deeply researching client projects and treated bitcoin the same – diving into vast online resources that had to be evaluated for credibility, and often discarded as complete junk. While time-consuming, the process did help to educate me – and this website for sharing my findings and experiences is one product of my journey. Within days of learning more about cryptocurrency, we both invested heavier in bitcoin and I wish I’d bought more than I did…again, that hindsight thing.

Bitcoin Value: More Than Price

As my understanding deepened, it became clear that “bitcoin value” was more than just the price. Of course, I won’t lie, the price is important – and as I write this post, it is now $10,802 – which is amazing given the small investment made a year ago compared to the gains. As the bitcoin price began to rise and new crypto-based services emerged – I could not help feeling the same as when the Internet started being adopted. I have built websites from the very beginning – on a MAC starting with v.1 of every software to create table-based sites with simple graphics, then Macromedia Flash and Javascript for animations, CSS for design, PHP for dynamic functionality and so on, right up to today. I had numerous clients point-blank tell me there was no reason or need for their business to have a website – only to circle back for services later. Now it is absolutely unheard of for even the smallest business NOT to have a website and a strong online presence.

I see those encountering bitcoin for the first time struggling with how it works, why it is valuable, and where it might end up. Obviously, the Internet is an often used reference point because of the similarly to bitcoin. Its decentralization, open-source code, development state, and potential to disrupt makes the comparison effective for helping newcomers grasp the magnitude of technological achievement and potential. The Internet touched the publishing, education, retail, music and film industries in ways we could not have imagined! Can bitcoin do the same – for many industries? Perhaps. While bitcoin isn’t designed to be the flexible infrastructure for a wide range of applications like the Internet, the underlying technology is. Outlined below is what gives bitcoin “value” and where it might lead, in my opinion.

Bitcoin Value: The Blockchain

By mid-2017 the blockchain was being discussed almost as often as bitcoin – and in a manner that suggested it could be divorced from bitcoin. But blockchains without bitcoins are just shared databases between trusted parties. “Trustlessness” is the virtue on which to focus, not the blockchain which enables it. Now we’re seeing new “side-chain” ideas emerge. If implemented in the bitcoin core by the open-source community, anyone can create a side-chain to interact with the bitcoin blockchain. This is going to open the door for new decentralized applications that use bitcoin as a unit of exchange.

These new applications won’t need their own coin or token. They can use the more widely-accepted, rapidly maturing bitcoin for exchange and operation – which will serve to add to the bitcoin value by strengthening the power of the network. I see the potential of this as being HUGE – allowing permissionless innovation to flourish while being tied to bitcoin and thus making it even more valuable and useful!  The rapidly emerging Lightning Network has the potential to address scalability issues, allow for instant payments with low fees, and perhaps open the door for an economy of decentralized apps that can’t be shut down, regulated, or censored – while exchanging the equally decentralized bitcoin and without exploiting the user’s personal information.

Bitcoin Value: Core Development

Anyone with the skills needed can be a core developer, a wallet developer, an exchange developer, a merchant developer or a processor developer – and individuals with those skills are part of the ecosystem. In many cases, these individuals are not “paid” – but they work to make their part better, and actually add to the security. Everyone involved is watching the network, checking code, finding/fixing bugs, and looking ahead at probability scenarios to figure out how to immunize against them.  It is a “community” and anyone can participate.  There are companies and industry players that fund bitcoin development, with some working toward a shared vision and mission for Bitcoin – while others have very different agendas.

Most companies are trying to hire blockchain engineers or Bitcoin engineers – and that supply is very, very small. Software developers that got involved with Bitcoin early on are now wealthy and do not need to work, started their own companies, or already work for companies very motivated to keep them happy.  As a result, blockchain programming is looking ripe as a lucrative career path.

Bitcoin Value: Speculation

The number of Bitcoin created each time a user discovers a new block is set to decrease geometrically so that the number of bitcoin in existence is not expected to exceed 21 million. This decreasing-supply algorithm was chosen because it approximates the rate at which commodities like gold are mined. Users who use their computers to perform calculations to try and discover a block are called Miners. The total supply in circulation is always lower than the theoretical total supply, and that bitcoin supply is subject to accidental loss, willful destruction, and technical peculiarities. Since approximately 20% of the algorithm’s total supply remains to be “mined” – investors anticipate a steady increase in the price as scarcity makes bitcoin more valuable over time.

Bitcoin has been described or likened to a commodity because of this finite supply, security against counterfeiting, high divisibility, global transferability, and durability. One should be aware that the supply of all cryptocurrencies is not mined like Bitcoin.  Many are released all at once and do not share other properties of Bitcoin, so great care should be taken before investing. That said, I’ve personally made a good deal of money speculating on altcoins and will continue to do so.

Bitcoin Value: Disruption

Personally, I believe the potential bitcoin has to disrupt is one of the key elements that add to its value. The ability the technology has to make organizations using it transparent, democratic, decentralized, efficient and secure will surely disrupt a number of industries. Especially those industries who claim to be, yet are anything but in reality!

While it certainly won’t be without volatility, I see bitcoin has the potential to disrupt the following – which by no means includes every possibility:

  • Financial and Payment Services: Banks serve as the critical storehouses and transfer hubs of value. As a digitized, secure, and tamper-proof ledger, blockchain could serve the same function, injecting enhanced accuracy and information-sharing into the financial services ecosystem.Can it do to banking what the Internet did to media? Banks are already trying to adopt the blockchain to become more efficient, faster and secure – but they will most likely never become transparent, democratic or decentralized.
  • Credit History:  Lenders minimize the risk posed by loans or lines of credit by evaluating an applicant’s history using credit reports. Blockchain technology can be used to make credit reports more accurate, transparent, and shareable by the applicant in order to get a loan more efficiently.
  • Internet Security:  The data on the blockchain is public, verified and encrypted using advanced cryptography so it is less prone to being hacked or changed without authorization. A consensus algorithm, like bitcoin’s proof of work, ensures that the next block in a blockchain is the one and only version of the truth, and it keeps powerful adversaries from derailing the system to fork the chain.
  • Supply Chain Management: Time delays and human error can be reduced using blockchain tech to document transactions in a permanent, decentralized record that is securely and transparently monitored. Could this be used to monitor costs, labor, waste at every point of a supply chain? Huge implications!
  • Prediction Markets: The blockchain for placing and monitoring bets on everything from sports to stocks to elections in a decentralized manner could change the entire research, consulting, analysis and forecasting approach.
  • Communications Networking: Blockchain tech is being explored to operate like a public ledger for a large number of devices that use encrypted messaging. Instead of a central location to handle communications between devices, they could update software, manage bugs, monitor energy usages – directly with each other.
  • Insurance: The blockchain can manage trust in new ways to verify types of data in insurance contracts – like a person’s identity, for example – to disrupt a global insurance market that is based on trust management.  People can now temporarily exchange assets — including private homes — for monetary value using online platforms. The problem is that in the absence of a public record it has been nearly impossible to insure assets on such platforms. The blockchain can be used to serve as the third-party in the contract between individuals as they exchange high-value items through the sharing economy.
  • Transportation: The blockchain can be used to allow both drivers and users of a ridesharing app to negotiate in a secure way without the need for third-party providers. This would allow professional drivers to build up their own transportation businesses vs. being controlled by a corporate entity that sets rates and takes a percentage. Parking, highway tolls, electric outlets for cars, etc. can allow car owners to pay automatically using built-in eWallets on the blockchain.
  • Online Data Storage: Everyone realizes the vulnerability to hacking, data loss, or human error when data is stored on a centralized server. Blockchain tech would make cloud storage more secure and more able to ward off attacks.
  • Non-Profit Organizations: Inefficiency and total corruption that prevents funds from actually reaching intended recipients would come to an end using blockchain tech to track donations. The blockchain’s secure and transparent distributed ledger will allow donors to see that the intended recipient has received the money.
  • Internet Identity:  Currently, your personal information resides on various company-owned servers for apps and services you use – and they have no inter-operability, nor do you “own” those pieces of personal data.  Blockchain tech can allow your identity to be used on the Internet by accessing apps on decentralized networks with portable data for any service and the ability to remove your data from any service.
  • Inheritances and Wills: Execution of wills involves the challenge of verifying the deceased’s actual death. Will-related litigation often involves proof of the “genuineness” of a will and determination of whether the legal interpretation aligns with the deceased’s intentions. While the use of blockchain technology would not completely remove these challenges, it would make factual information easier to determine, provide verifiable transaction data, and dismiss claims that are without merit. Smart contracts with pre-programmed rules determined by the deceased that automatically distribute their assets to beneficiaries would eliminate the need for executors and court battles regarding the integrity of the will.
  • Digital Marketing: Instead of Google or Facebook middlemen, advertisers online could list directly to a blockchain-based browser so opt-in users could receive better targeted and fewer ads without any malware. Advertisers get better data on their spending and users get quality ads of interest instead of the trash we’re bombarded with every second.
  • Elections and Voting: Rigged elections, voter registration, identity verification, electronic voting glitches and counting – blockchain tech can address, manage or eliminate by creating an immutable, publicly-visible ledger of recorded votes that make elections fair and democratic.  What a concept?! Eliminate the need for recounts by taking voter fraud and foul play off the table. Capturing votes as transactions through blockchain, governments and voters would have a verifiable audit trail, ensuring no votes are changed or removed – and no illegitimate votes are added.
  • Government: Corrupt, slow, opaque, bureaucratic government systems with blockchain-based tech implementation can be more secure, efficient and transparent. Now that would truly be disruptive!
  • Law Enforcement: Maintaining the integrity of the “chain of evidence” is paramount in police investigations. Using blockchain technology for a distributed, hard- to falsify record could provide an additional layer of security for the handling of evidence. Use in the field of a sealable, tamper-proof container with communication chips to register contents through a blockchain system is one possible solution for evidence management.
  • Health Care: Lack of a secure platform to store and share data is the number one challenge faced by the medical industry. These systems are often hacked and grossly inefficient because they are so vulnerable and outdated. Blockchain tech can allow medical records to be safely stored and shared with authorized professionals or the patients themselves without compromising data security and integrity – but also to make diagnosis faster and more accurate.
  • Public Benefits: Blockchain tech can assess, verify and distribute welfare, unemployment, retirement benefits, and more to put an end to horrific waste, fraud, inefficiency, and bureaucracy that drains public resources.
  • Energy and Utilities: The long-running, highly centralized industry could be tremendously disrupted if energy producers and users could buy energy directly from each other. No more public grid or trusted private intermediary to buy and sell energy.  Critical infrastructures like power plants and transportation are equipped with connected sensors that pose great risks. Blockchain technology widely adopted would reduce the probability of hacking, as the cyber protections are more robust than legacy systems.
  • Academia and Education:  Academic credentials have to be universally recognized and verifiable which is still a manual process.  Blockchain solutions could streamline these procedures and reduce fraudulent claims of unearned educational credits, as well as store, share and secure student records.
  • Human Resources:  If criminal and employment records were stored in a blockchain ledger, they would be impossible to falsify. Background checks and employment verification would be streamlined to make vetting and hiring happen more quickly.
  • Music Online: Blockchain tech an provide a way for musicians to get paid directly by those fans who listen to their music, and not give up large percentages of sales income to online platforms or record companies.  Licensing issues would be automatically solved by smart contracts that catalog songs by their respective creators.
  • Sports Industry: Investing in athletes has successfully accomplished by sports management agencies and corporations, but not fans. The blockchain could decentralize the process of funding athletes by democratizing fans’ ability to have a financial stake in the future of tomorrow’s sports stars. For example, fans would use cryptocurrency to invest in their favorite athletes. The successful investment would result in a small portion of the athlete’s future earnings, perks like seat upgrades or VIP tickets, etc.
  • eCommerce: Blockchain-based, decentralized retail utilities can connect buyers and sellers without a middleman or the associated fees.  Trust would come from smart contract systems, the security of exchanges and the reputation of management systems.
  • Real Estate: The bureaucracy that hinders the buying and selling of real estate is well-known to all home owners, buyers, and realtors. Lack of transparency, fraud, mistakes in public records, extensive paper-based record requirements for tracking, ownership verification, accuracy of documents, deed transfers – will be considerably sped up by using blockchain technology. Real estate blockchain applications can help record, track, and transfer land titles, property deeds, liens, help ensure that all documents are accurate and verifiable – without the need for third party involvement.
  • Auto Sales and Leasing:  Buying, leasing or selling a vehicle is a fragmented process for everyone involved in the transaction. Blockchain can be used to streamline the process into a click, sign and drive process that could also be used for vehicle registrations and insurance policies.
  • Fund Raising: crowdfunding creates trust between project creators and supporters – but platforms that manage this trust charge high fees. Blockchain-based crowdfunding creates trust using smart contracts and online reputation systems that remove the need for a middleman.  New projects can release their own value-representing tokens to raise funds that will later be exchanged for the products, services or cash as appropriate.

The fact is if an industry deals with data or transactions of any kind, it will likely be disrupted by blockchain technology.  This emerging tech opens up the possibility for many new opportunities that should logically increase bitcoin value.  As a developer, I believe the blockchain will transform many other industries with use cases for a transparent, verifiable, secure register of transaction data – especially if it makes them resistant to fraud and more cost-effective.  But no doubt, it will be disruptive.

So, Happy Anniversary Bitcoin! It’s been a great year and I look forward to many more 🙂