Is This Driving the Bitcoin Price?
While recent jumps in the Bitcoin price are mostly due to government overreach in India and China, there are other reasons to be bullish on blockchain technology.
For instance, a new report from consulting firm Deloitte LLP finds that 12% of large companies are developing applications based on blockchain tech. (Source: “Deloitte survey: Blockchain reaches beyond financial services with some industries moving faster,” Deloitte LLP, December 13, 2016.)
That number is shockingly high, particularly to people who viewed the technology as distant and experimental. More to the point, it suggests that blockchain has made significant headway in the last few years, albeit under the radar.
Since blockchain tech is the basis of Bitcoin, the rapid increase in adoption could help prop up the Bitcoin price. As a matter of fact, it could even drive the Bitcoin price further up and to the right.
The Bitcoin price is dependent on two things: 1) How optimistic people are on the future of Bitcoin, and 2) The volume of transactions that take place using Bitcoin.
Now, before we get too far into the weeds, it’s important to clarify something. Bitcoin is only one type of blockchain currency. There are plenty of copycats emerging from the woodwork, so there’s no guarantee that an increase in blockchain use equals an increase in the Bitcoin price.
However, it is likely going to help the Bitcoin price. We can’t simply forget that Bitcoin was the first and most prominent of the blockchain currencies. Visibility is valuable. For instance, consumers were drawn to the “iPhone” during the smartphone wars because Apple Inc. (NASDAQ:AAPL) was first.
All the headlines and media hoopla captured the public imagination. Consumers remembered that the iPhone was the original breakthrough in smartphones, and that distinction afforded Apple an extra chunk of allure and mystique.
The historic rise of Apple’s share price is a testament to that important business truth, namely that being first matters. Analysts call it “first-mover advantage.” Venture capitalists warn their founders to “move fast and break things” lest someone beats them to market.
Whatever you want to call it, the odds are that Bitcoin will benefit from a surge in blockchain use.
This would suggest that transaction volumes will rise, which would in turn make speculators more bullish about the future of the Bitcoin price. Ultimately, these factors could reinforce each other in a positive spiral, thus creating an opportunity for enormous gains.