The value of Bitcoin has been on a bit of a rollercoaster the last few days. When I bought in a few weeks ago Bitcoin was going for about $6750 per coin. Just yesterday, when I sold some of my holdings, Bitcoin had pushed past the $10,000 mark and at one point was nearing $13,000 per coin.
This morning it is down to $9400.
Even the broadcasting team on CNBC’s Squawk Box was discussing Bitcoin this morning, including a feature story about how landlords are now able to accept Bitcoin for rent through a provider called ManageGo.
So, is this still all hype or are crypto-currencies close to going mainstream?
Bitcoin - my take on what it will take to be mainstream
About five years ago I was asked to speak to a room full of banking executives about Bitcoin and other crypto-currencies. Those C-level professionals wanted to know what it was, how it worked, and what the future held.
Now, I am not going to go into the who, what, when, why and where of crypto-currencies. You can easily Google that. But I will share with you what my crystal ball said five years ago and what I think now.
Five years ago I told those banking executives that Bitcoin was a fad. But, it was a fad that wasn’t going anywhere.
The challenge at the time was that crypto-currencies were still largely viewed as tools for criminals. It didn’t help that there was constantly negative news stories coming out about things like their use on the Silk Road and the Mt. Gox debacle.
It was my belief, at the time, that for Bitcoin and others to see mainstream adoption that they were going to need to voluntarily undergo some regulatory oversight from the banking industry or other regulatory bodies.
I get that goes against part of the concept. But what that would accomplish is allowing crypto-currencies to use the same playbook that many fintech companies have used.
See, while many fintech companies have amazing financial solutions they often lack customers and the trust of consumers. By partnering with banks they have essentially acquired both of those things.
So, my take is that for Bitcoin and others to become mainstream as a currency they are going to need to gain the trust of consumers. That means much, much less volatility in their values. Otherwise, they will just remain another speculative investment option.
*Note - nothing in this article should be considered an endorsement or suggestion to invest in any crypto-currency. Doing so should be based on your own risk appetite and decision.