Bitcoin is new gold – Rise of new asset class digital-asset

New age commodity

Each day passes, you think it will crash, instead it goes even higher. Bitcoin madness does not look to get any better, with prices soaring faster than ever, more and more miners joining the pool, and hence making it harder and harder to mine the coin resulting in supply demand issue. On one hand it is getting harder to mine the coins, other hand swath of investors with bag of money are buying them result you can see already.

Millennials Gold

The cryptocurrency is solving a problem in the digital economy, which is digital trust. You don’t need a centralized authority to authorize a transaction or a ledger. The next 10 years, this new generation of millennials are going to view trust as a replacement for gold. So, bitcoin is essentially digital gold for another generation. With that kind of prediction it could easily reach 100K in next 10 years. People who considered it as currency now realizing it to be an asset with great potential. Even with very conservative growth lay out it is going to touch 100K in next 5-10 years.

It has key features to be the next gold

  • Limited supply: There can only be around 22Mil bitcoins be mined and majority have already been mined. Any new mining is getting harder and harder to mine.

  • Trust: Being a public ledger mean, majority of the computers in the network will be trusted, hence changes of getting all of them getting rough is pretty slim, so less likely to be get compromised.

  • Value: With trust, here comes the value.

  • Demand: Combination of Trust and value brings the demand.

Millennials Silvers and other digital commodities

Other coins, forks of bitcoin, joining the race would lead to creation of more and more asset classes, would act like silver and copper. As we are embarking into the new digital age a digital trust would be bigger asset then a tangible asset. Take an example abo0ut zcash, it is fork of bitcoin with some added feature which is complete secrecy about sender and receiver. Unlike bitcoin where everything is in public domain.

As we see more and more ICOs are coming up, which are basically forks of Ethereum, each coin having a special feature cater so certain segment of the economy. To have a simple correlation you could think of different metals being used for different purpose. Iron has it’s own usage, demand and supply similarly each coin would have its own domain.

Rise of AI Analytics

The traditional financial analytics won’t be able to predict its demand and supply as it is all controlled by algorithm and human brain can’t comprehend it. These new class of asset, crypto-assets would need to be analysed using AI algorithms rather than sentiments and hypes. Not surprisingly it will also lead to heavy demand for semiconductors devices, which will create great investment opportunity for investors who could not afford to buy a bitcoin.

Supply and Demand

As it goes with any commodity, such as oil if you find a big oil reserve the prices goes down, example US shale oil. Same with the bitcoin, a next technological breakthrough or algorithm breakthrough could lead to dramatic price drop/correction. Taking closely with the US shale oil, people knew about this oil for long time, however, the technology was not smart enough to extract it economically. When the technological break through came, fracking, the oil price went down dramatically.

I think it is still too early to say what is next, nobody knows if the bitcoin hype is a bubble or actual value as unlike traditional commodity it is very hard to predict in this case simply because we can’t without a complex AI machine, which could dial up in future and tell us what is about to come.

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