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Blockchain breakthrough? Investor outlook

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Michael Terpin is co-founder of BitAngels. A decentralized entrepreneur and investor group. He also runs Transform Group, a PR and marketing consulting firm focusing on blockchain.

In this CoinDesk review, Terpin divides the blockchain industry into three sectors and gives them an outlook for 2017. Looking back to 2016, one can certainly say that the blockchain sector has earned a fair share of victories, defeats and debates.

For the year 2017, however, the sector is progressing with self-confidence. Of course, there is still a chance of catastrophic events (which have occurred several times in the short life of this industry), but equally likely is parabolic growth.

So how can investors identify patterns in a growing industry?

First, an understanding of the fundamentals. I divide the industry into three categories (Bitcoin, other public blockchains and consortia, and private ledgers). Building on these categories, I give my forecast for these areas in the coming year.

Bitcoin
When David Johnston and I co-founded BitAngels more than three and a half years ago, Bitcoin was still a novelty among traditional investors. He was going through one of his toughest chicaneries. In early 2013 it stood at 13 US dollars, rose to 233 US dollars and then quickly dropped back to 50 US dollars.

When we started, the price recovered to USD 120. Everyone was curious to see if the price would recover completely by the end of the year. An investor at our first meeting, Vinny Lingham (now CEO of Blockchain-Startup Civic), made the extraordinary statement that Bitcoin would reach the price of 1,000 US dollars by December. He was right.

Prewound to December 2016 and the prehistory is strongly reminiscent of events in 2013. Long-term investors have already recognized this for Bitcoin. From my side, however, the ecosystem has greatly improved.

While all the madness of the market is still based on supply and demand, the dependence on a single exchange, Mt Gox, is no longer there. Exaggerated pricing is no longer likely today. There are dozens of independent exchanges supported by VCs and compliant by regulators.

The big trends for Bitcoin in 2017 will be from my point of view the following

1. the 1% are now getting attention
Well-known family offices already invested in 2013, when Barry Silbert offered his Bitcoin Investment Trust to accredited investors (the price was just over USD 100 per Bitcoin).

The investment became public as GBTC, which is technically not an ETF. But it was based on holding Bitcoin and actually the trade was covered (one share was covered by 0.1 BTC).

SeekingAlpha called it the “stupid investment of the week” in March. The prices of Bitcoin and GBTC have since doubled.

2. the first Bitcoin ETF comes onto the market
One thing I predicted in a January 2014 meeting was that Bitcoin would have to get to the mainstream through an ETF. Be it on NASDAQ or the New York Stock Exchange (NYSE), so any investor can benefit as easily as buying a gold or silver ETF. (The other two things Bitcoin would need to succeed are Bitcoin debit cards and a Bitcoin exchange, which must be available in all 50 US states. Both things happened in the same year).

It now seems very likely that the Winklevoss Bitcoin Trust (COIN) will be listed on NASDAQ this year.

3. the price will be higher in direct correlation to the war on cash
India, Venezuela and now Pakistan – while each new government is trying to make the banknotes even bigger (in the case of India “big” is just 7 US dollars and in Venezuela it is even less), the people are trying to find ways to convert their cash into hard cash: Gold, Silver and Bitcoin (the only hard investment that is also digital).

While this is not as violent as the ban on cash, capital controls (China) and hyperinflation (Venezuela and much of Africa) mean that many people don’t have the opportunity to buy Euros or USD, hoping to find a currency that loses its value more slowly.

For some time Argentinians have bought stereos as a means to store their value somewhere.

Bitcoin captures the value better than used goods and in the end is even more liquid than a DVD player.

4th Bitcoin will continue to grow
My personal assessment is that Bitcoin will reach the $2,200 mark by the end of 2017. It could

28. October 2018