This is the second part of a two-part series on bitcoin and cryptocurrency. To read the first part click here.
Bitcoin rang in the New Year with a hangover, after crashing for a few days and suffering a hack at one of its exchanges.
It was a fitting ending for what many would describe as a turbulent 12 months for the cryptocurrency. To get perspective on what's ahead, Tech Times reached out to several financial and industry experts for insight on bitcoin's future by asking experts this question:
What will it take for bitcoin to enjoy long-term stability and in what direction do you see the cryptocurrency heading right now?
James P. Jalil, partner/chair, Thompson Hine's Cryptocurrency Practice
Jalil believes in the blockchain technology on which bitcoin rests. Whether or not bitcoin continues to survive, Jalil says the technology will prosper and that we see the world using the blockchain technology in ways we are just beginning to understand.
"Just as the Internet led to peripheral technologies and uses, and just like the smartphone led to vast applications, which we now call 'apps,' so too will blockchain technology develop uses and applications across broad consumer, financial and other industries, as well as all levels of government, in the years to come. I remain more bullish than ever on bitcoin, but even more so on the vast, untapped potential of blockchain technology."
The blockchain technology Jalil refers to is the secure transaction ledger database that is shared by all parties in an established, distributed network of computers. It validates and stores every network transaction, essentially eliminating the need for "trusted" third parties such as payment processors.
Norman Comstock, managing director, Berkeley Research Group
Comstock says the currency has to thwart the hacks on its exchanges in order for it to grow. He notes Bitstamp's cold reserve of up to 90 percent of its bitcoin helped to minimize the impact of the recent wallet hack, which is a common practice on exchanges.
"As with other crises, communicating the root cause of the hack has been identified and remediated may help to ameliorate consumer confidence in the cryptocurrency exchange. Although this may initially be concerning, the adoption of cryptocurrencies like bitcoin will continue to grow."
Cryptocurrencies use cryptography to secure the transactions and to control the creation of new units, which makes them hard to counterfeit.
On the Fence
Erick Watson, CEO, New Path Minin
Watson is playing Switzerland when it comes to bitcoins and has his eye on other currency options.
"I'm neutral on bitcoin at the moment, and am holding my bitcoins. I believe the future of bitcoin is bright, but current circumstances are such that performance will be muted for the short to medium term. For near-term appreciation, I am switching to other alt-coins, such as PayCoin, where I expect rapid appreciation within the next three to six months."
Holger Arians, investment manager, Future Capital
Arians recently returned from Berlin where he met with online entrepreneurs who he said are still generally pessimistic about bitcoin. Arians says adoption by the general public would give bitcoin long-term success, but the very nature of the technology will prevent this.
"Besides the volatility (which is in my opinion largely influenced by hacks and scams), bitcoin is not a safe technology, Bitcoin is in the dark corner and fraud and scams happen, because bitcoin is anonymous and transactions are irreversible. In my opinion, that needs to change [for it] to become mainstream and more stable. I still believe in the long-term benefit of bitcoin for various reasons, but we need to take [away] the fear that people have today, i.e., losing everything through volatility or theft."
Philip Rooke, CEO, Spreadshirt
Rooke believes bitcoin lacks feasibility for e-commerce companies and platforms because most consumers are happy with established payment systems.
"However, the hardcore techies that have to try the latest thing will be drawn to the novelty of bitcoin. Bitcoin, in essence, is a currency system that is largely designed for the tax-avoiding rich who are anti-establishment and need to send money to really difficult places."