Blockchain technology, the basis for the digital currency Bitcoin, isn't well understood. Yet, even beyond Bitcoin, it could impact our world in profound ways.
"I definitely recommend that everyone who is an investor, technologist or business person spend some time getting up to speed with this," said Bruce Fenton, executive director for the Bitcoin Foundation, chief investment officer for Atlantic Financials as well as managing director for Boston Gulf Advisors Group.
Fenton has extensive experience as a global advisor with a strong interest for emerging markets and new technologies such as Bitcoin. We sat down with him to discuss the new technology and how it might impact your world.
XBT Provider continuously interviews reputable individuals in both finance and the bitcoin industry to try to give an unbiased view on what this new technology might mean for investors.
Why are you interested in bitcoin and blockchain technology?
The blockchain is basically the world's greatest ledger...it's open source and public...yet also protects the privacy of users. This is an amazing new invention that solves an age-old problem of having to rely on trusted third parties. The implications are massive.
Bitcoin, the first and most significant application of this blockchain technology, allows for value to be transferred from one party to another securely with no bank or other intermediary involved. This has never been possible before. It represents the future of money...a global currency for the Internet age with no central control authority.
What is your view on the regulatory landscape of these technologies?
Bitcoin does make things easier for criminals, just as shoes, phones and cars do, because new technologies make things easier for everyone. With any new tech, there are negative actions that can occur but we should never let innovation and progress be hampered because of fear.
I think that the best focus, instead of new regulations, is to look to technical solutions for problems we see in the world.
What are your thoughts on investing in bitcoin to diversify your portfolio?
Bitcoin is new, experimental and very risky as an investment. It could change the world and that could be reflected in a massive value increase even to the thousands or tens of thousands of dollars per Bitcoin, but investors should only invest what they can afford to lose. Volatility, regulation and unforeseen problems could cause an investor to lose all the money they put into Bitcoin.
Are you invested/would you consider investing in bitcoin?
Personally I'm overweighted in Bitcoin. As a 20+ year financial advisor, I wouldn't advise this to someone else but I firmly believe in the technology and its future.
What is your opinion on the current price of bitcoin?
If this works, and that's a big if, then it's likely the price will be dramatically higher. It's somewhat of a binary play...either this works and Bitcoin becomes a reasonable small percentage of Internet commerce or the size of a tiny third world economy....in which case the price will be much higher...or it doesn't work in which case the price would likely decrease, perhaps to a very low point. I think there are enough existing users that the price should at least stay where it is.
What are you negative about regarding this industry?
The industry is still new and unproven. It is challenging to find models with positive cash flow and the industry faces many risks. We still suffer from a lack of solid and professional teams...although this is improving by the day.
What are you positive about regarding this industry?
It's exciting to see so many big people moving into this space. The challenge I mentioned about the lack of solid teams is something that's improving very rapidly with more leading executives and tech experts joining Bitcoin. Venture capital investment is significant, one of the leading sectors in the world and the improvements in the technology through new applications and development is moving at a staggering speed. It's very exciting.
Would you like to add anything?
Some of the best minds in the world from business and technology believe that Bitcoin may change our world in ways as profound as the Internet or social media have. We don't know the future, but we do know for sure that a superior way of doing things now exists...and this genie cannot be put back in the bottle. One way or another this is going to change our world. I definitely recommend that everyone who is an investor, technologist or business person spend some time getting up to speed with this.