Daily Bitcoin News Update
Bitcoin is more likely to trade for $100.00 than $100,000 in 10 years. That’s a prediction delivered by one revered economist. While we respect his analysis, we fully contradict the premise on which his price target is based. Let’s dive deeper.
Kenneth Rogoff, a professor at Harvard and a former economist at the International Monetary Fund (IMF), contends that Bitcoin’s use is limited. He was on CNBC’s Squawk Box yesterday where he asserted that Bitcoin’s best use-case has been as a monetary unit for illegal activities, particularly money laundering and tax evasion. The economist said that if you take these illicit activities out of the equation, there will be little reason for people to use Bitcoin.
Rogoff is of the view that this illicit use of Bitcoin will be curbed as governments around the world move toward regulating cryptocurrencies. Regulations, in his view, would put a cap on Bitcoin prices. This is why Professor Rogoff foresees the BTC price crashing to $100.00 in the next decade. (Source: “A decade from now, bitcoin is more likely to be $100 than $100,000, Harvard economist says,” CNBC, March 5, 2018.)
We dispute his reasoning in full.
For starters, Bitcoin’s primary use-case may be as a unit of digital currency but its blockchain technology doesn’t limit it to that. Consider the fact that from banks to multinational corporations to governments, blockchain is finding its utility in operations everywhere. In fact, we can no longer keep count of the use-cases blockchain has presented to the real world.
Moreover, Rogoff’s contention against Bitcoin’s use in illegal activities may have held water a couple of years ago, but today, Bitcoin is much bigger than that. In fact, even the dark web has given up on Bitcoin and moved to cryptos like Monero and Litecoin.
Bitcoiners of today are not only using it as a medium of exchange for buying and selling legal goods and as a legitimate store of value, but also, more notably, as a base currency on cryptocurrency exchanges. Since most altcoins are expressed in terms of BTC, crypto investors must first buy Bitcoin in order to invest in other altcoins. This is where a significant number of Bitcoin transactions originate.
Moving on, Professor Rogoff postulates that government regulations would underpin Bitcoin’s demise. We beg to differ. As I explained in my post yesterday, while a complete ban does cause a blow to Bitcoin, most other regulations are, in fact, a blessing in disguise. These regulations legitimize Bitcoin’s use by curtailing illegal activities.
Take the example of South Korea, which has imposed a ban on anonymous trading to restrain illicit trading and money laundering. Despite this stringent regulation, South Koreans are continuing to buy Bitcoin.
While it’s true that the fear of a complete Bitcoin ban caused a sharp drop in prices, once the rumor of the ban died, prices began to recover. Since then, Bitcoin prices have gained momentum even with the new stricter regulations in place.
So Professor Rogoff’s prediction, in our view, is completely off the mark.
Chart courtesy of TradingView.com
It’s worth mentioning that the Bitcoin price is routing on Tuesday after a three-day rally. But since the toing and froing is part and parcel of crypto investing, we’re not reading too much into it.
Bitcoin prices are up one day and down the other. Because of high volatility in this market, these oscillations will likely continue in the short run, so it’s best for investors to focus on the long term.
Our long-term Bitcoin price prediction is upbeat, unlike Professor Rogoff’s. Our BTC price target for 2018 is set at $15,000.