their entire cash position of $ 500m into Bitcoin. Since then, they have borrowed an additional $ 1b to buy the superior asset and many listed corporations including Tesla have followed suit. In fact, press releases show that listed companies already own 7 % of all available Bitcoin.
“ If you want to invest in this asset class do your homework, get educated, choose reputable service providers and be prepared for a wild ride.”
According to Michael Saylor, CEO of Microstrategy, having dollar reserves is like building a company on top of a melting icecube.
There will only ever be 21 million bitcoin. The issuance rate of Bitcoin is similar to that of gold in that it requires a finite resource to extract and is fundamentally scarce. The difference with Bitcoin though, is that the amount in circulation can be audited in real time. Scarcity can therefore be defined with absolute certainty instead of trusting on states that report their gold reserves.
Although the supply is known and fixed, the demand of Bitcoin can vary significantly from a scale of fear-and-doubt to greed-andeuphoria. Human psychology is therefore portrayed in the form green and red candles as the market tries to value this unique asset.
What You Need to Know! Since Bitcoin, the cryptocurrency space has been flourishing with innovation. Ethereum improved on the programming capabilities of the Bitcoin Blockchain. It comes with its own programming language called Solidity, which allows anyone to write software on a platform that is immutable and censorship resistant. As with any new technology, it formed a bubble that ended badly for many investors looking for the new hot ICO during 2017. But as it marched through the hype cycle Trough of Disillusionment, it became stronger and today we are truly climbing a Plateau of Productivity. Specifically, a concept called“ Decentralised Finance”( DeFi) has been steadily built using smart contracts.
This can be regarded as the next phase of cryptocurrency, which takes it from a store of value and / or retail utility to a complete banking solution. It allows anyone to borrow / lend money, make payments, use a decentralised exchange, or even sell their digital art. Economic attributes such as interest rates, incentives, asset support and risk management rely on democratic governance processes by market participants.
“ Cryptocurrencies and Blockchain technology are here to stay.”
There is no doubt that cryptocurrencies and Blockchain technology are here to stay. They are at the cusp of disrupting every aspect of global finance, including banking, accounting, insurance and trade. Other industries will follow, but only after we burst other few bubbles. The cycles will remain violent while regulators discuss their strategies. If you do decide to invest in this new asset class, you should know that there are no guardians that will save you from bad decisions. Do your homework, get educated, choose reputable service providers and be prepared for a wild ride.
SOURCES Blockchain Academy
CAREL DE JAGER Chemical engineer in the energy industry. He now works as a Consultant for The Blockchain Academy.
SA Real Estate Investor Magazine MARCH 2021 17