How the United States is handling the rise of Bitcoin: Jim Duffy comment

Good things sometimes take time – we have always been told. Makes sense as the best whiskies have to sit for 12 years and more before the get stamped with “malt”. The maturation time, care and diligence that goes into creating such things of beauty is not lost on us.
Bitcoin has been making the headlines over the past few years. Picture: John DevlinBitcoin has been making the headlines over the past few years. Picture: John Devlin
Bitcoin has been making the headlines over the past few years. Picture: John Devlin

So, this week, when Bitcoin hit an all time high in its price, it reminded me of why good things take time. Job done and a clear qualification that the 2017 “bubble” was, in fact, not a bubble. Having written extensively here on Bitcoin and crypto currency I was gratified that it hit the sweet spot and will probably go on from here to test new boundaries. But satisfied as I was, it was the Winklevoss Twins that made me sit up and choke on my morning coffee.

Cameron and Tyler Winklevoss – you may have heard of before. These two dashing young chaps were part of the Facebook story. They featured prominently in the film, The Social Network, I have been told. I never watched it and never will. As Facebook is not a company I wish to know anything about, albeit I will when it is broken up or goes bust. Nevertheless, the Winklevoss twins will not be sending the Facebook CEO a Christmas card anytime soon and will feel vindicated that they left with some cash and will soon be worth more than Mr Zuckerberg – if their predictions are right.

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The twins operate a cryptocurrency exchange in the USA and UK called Gemini. They are big bitcoin advocates and are already bitcoin billionaires, having scooped up millions of dollars worth of Bitcoin at rock bottom prices. They are regularly asked to talk on podcasts, YouTube and all manner of business TV shows.

They like to be prominent, front and centre and bang the bitcoin drum – with humility. They are solid proponents of fair and measured regulation of Bitcoin. In short, these handsome brothers are the picture postcard boys for Bitcoin and do their best to market it with vigour, political nous and with an eye of the future. Anyone who is in or around crypto investment pays attention when they speak.

Therefore, this week when they made a bold price prediction for Bitcoin, it turned heads and set Wall Street alight. Speaking on CNBC’s Squawk Box the twins forecast that Bitcoin will gain more than 25 times its current value as more investors adopt the cryptocurrency as an inflation hedge.

This as the US Fed wants the US economy to run hot to jolt inflation way above 2 per cent. The hypothesis for all of this is the current thinking that Bitcoin is Gold 2.0. Indeed, a store of value that has properties like gold, but is much easier and secure to trade and store. Many well known investors in the US have recently publicly commented on Bitcoin possessing this very trait as a store of value and inflation hedge.

The twins appear to be more confident and bullish now that traditional Wall Street investors are waking up to Bitcoin as a digital asset they will and are buying. Tyler Winklevoss commented: “Our thesis is that Bitcoin is gold 2.0 and it will disrupt gold. If it does that, it has to have a market cap of $9 trillion. So, we think Bitcoin could price one day at $500,000 a bitcoin… 25x from here.”

And this is what made me sit up and listen. It seems that the fight is well and truly on with gold, and the bitcoin brigade have a price target in mind. And there is evidence that may support this.

Only this week, the Guggenheim Macro Opportunities Fund filed to hold up to 10 per cent of its net asset value in the Grayscale Bitcoin Trust fund. If the full 10 per cent was allocated this would mean a bitcoin punt of about $530 million. Not small change.

It is not the first and will not be the last Wall Street firm to consider Bitcoin as an asset class that is investable for the future. Throw in that banks in the US can now legally provide custodial services for clients holding bitcoin and there is a paradigm shift taking place.

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The Winklevoss Twins are confident. Bitcoin was born 12 years ago. They may have a winning “malt” on their hands.

- Jim Duffy MBE, Create Special

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