Bitcoin, Ethereum (ETH), Bitcoin Cash (BTH)
Bitcoin has seen a meteoric rise in the last few months. But some key figures in tech space like Tim Draper had called its price of $10,000 in September 2014. For the last few years bitcoin went through lot of community in-fighting on how it should change. Miners and Businesses that accept bitcoin as payment wanted larger blocks to accommodate more transactions while developers and users wanted to keep the blocks small to preserve its most important property – censorship resistance via decentralization. Last few months of how this played out seem to give lot of confidence in the market that BTC can be the new store of value that is censorship resistance. At $10,000 per btc it represents around 2% of gold’s market cap. It is believed that Bitcoin has a lot of more room to grow for some these reasons:
- Its capped at 21 million of which ~17 million is already mined. There will be only 21 million Bitcoins and no more.
- With its decentralized and censorship resistance property people are more comfortable using it as a “store of value” knowing that state and government actors cannot shut it down.
- There is still no official vehicle for institutional investor to buy BTC in their portfolio.
- This will drastically change with Chicago Mercantile Exchange supporting bitcoin futures
- This can pave way for ETFs to be approved
- Even if investment vehicles put in 1% of their holdings on BTC that is trillions of dollars
- China and Russia might be looking at BTC as the global reserve currency to move away from dollar dependency
- BTC has by far the smartest technical people to add new features and scalability
Second largest crypto currency after bitcoin has also risen in price significantly this year. Where BTC is seen as store of value , ethereum is seen as the permission less global computers that can run smart contracts. Because of its flexibility in programming it provides much more flexibility on what can it can be used for. For now the most important use case this year has been crypto asset creation for companies in the form of tokens. Companies have used ICO to sell tokens to raise money for the companies bypassing the traditional Venture Capital route. There is a sense that venture capital business is now changed forever with this new paradigm of raising capital. Ethereum is the undisputed king in this use case. We feel that ethereum also has lot of room to grow in future due to following reasons
- It has the largest developer eco-system led by a benevolent dictator wunderkind Vitalik Buterin.
- Its aggressively pursuing more efficiency and scalability than bitcoin
- It has almost become the decentralized platform to create innovative web 3.0 applications such as ethereum naming service ( to compete with centralized Domain name service).
- The eco-system is vibrant with lot of companies trying to create lot of decentralized application on this platform such as ( windingtree.com, ins.world, www.bancor.network just to name a few).
Bitcoin Cash (BTH)
Some segment of community (especially miners and businesses) feel that bitcoin should be first used as payment system and store of value would naturally follow. They forked BTC on July and has been aggressively promoting this platform. Although we do not see long term gain in this coin there could be significant volatility that can be played in short term for following reasons
- People behind this have large pockets as they own lot of bitcoins and can therefore manipulate the market in the short term.
- They are in a way misleading people into thinking that this is bitcoin with name closely resembling bitcoin.
- They do not have a good developer eco-system and therefore will not be able to provide future innovation like BTC.
- Due to the path they have taken, this system will be more and more centralized thus easy for governments to shut down