RALEIGH – Blockchain technology, bitcoin and cryptocurrency evangelist John Fallone, an attorney and entrepreneur in Raleigh, thinks this “bitcoin crash” so speculated upon will be something we can ride out – if it happens at all.
Our first question was why we’re seeing such a spike in Bitcoin value over the last few days.
“Any time you have bitcoin hit a milestone that’s represented by an order of magnitude, that attracts a whole new group of people interested in it who are willing to throw money at it,” Fallone said.
CNN reports that he digital currency plummeted Friday more than $3,000, “swinging wildly between a high of $17,154 and a low of $13,964” as tracked by news site CoinDesk
Fallone believes this massive attention spike has been one of the strongest drivers in bringing bitcoin up seven grand in seven days. Casual investors, people dipping their toe into cryptocurrency [Wikipedia: “a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions”] and some players with deep pockets are taking notice and buying in.
Also of note are the announcements of bitcoin futures trading in coming days increasing the legitimacy of the platform and driving more serious and wealthy investors.
While the increased value of bitcoin is mostly a net-good for investors, Fallone does have some trepedations about the “hype-bubble” we’re seeing.
Hype and hacks threaten bitcoin investors
When asked about the probability and severity of this bubble popping, what he had to offer was “I don’t know” — following a few moments of silence.
He expounded later that “I’m not convinced that for first tier cryptocurrencies” such as bitcoin this pop would be fatal, but that “second tier cryptocurrency bubbles will burst in a few years.”
The “s—- coins” as he likes to refer to them, will die out while more steady and substantiated cryptocurrencies can ride out these major drops in valuation.
Fallone, a Duke Law and Entrepreneurship LLM graduate, brings an extensive background to the bitcoin discussion. A former managing director of Duke Law Tech Lab, he also worked as COO of the Lincoln Network, Y-Combinator grad and is founder of SendHub, a business messaging service. The tech-world veteran immersed himself in emergent tech and the blockchain [Wikipedia: “A continuously growing list of records, called blocks, which are linked and secured using cryptography”] while focusing on his law firm Fallone SV which focuses on law for the startup community.
We wondered if this incredible rise was unprecedented in the cryptocurrency world, and Fallone responded with a resounding “No”.
“Ripple 40x’ed this year, Litecoin 25x’ed, Etherium 60x’ed, Dash 60x’ed, Monero 25x’ed and Neo 300x’ed,” he noted.
Why don’t other cryptocurrencies get the same attention, though?
It might have something to do with the near $300 billion market cap. Fallone notes that “Bitcoin is about 50 percent of the cryptocurrency market cap, the next 30 percent are second tier and then it’s 20 percent s—-coin,” making BTC the clear frontrunner in the arena.
What is bitcoin anyways?
For newcomers, bitcoin is a decentralized form of currency reliant on blockchain technology. These digital coins can be traded by users for goods or services on the blockchain, unreliant on the whims of national economies or market crashes. Valuation is dependent on scarcity (there can only ever be 21 million bitcoins), stability and the percieved utility of a bitcoin for either purchase power or as a way to store cash.
This wouldn’t be the first time bitcoin has crashed and it won’t be the last,Fallone argues.
In fact, shortly after our call bitcoin marketplace NiceHash was hacked, with the thieves walking away with $64m in bitcoins in hand. This may have had something to do with the small dip we’ve seen overnight.
To sell or not to sell?
Many blockchain evangelists and Bitcoin early-investors are holding out and refusing to panic and sell, some have seen possibility in the incredible fluctuations in Bitcoin over the past few days as something akin to day trading.
One user on reddit discovered a Bitcoin holder who this morning netted a gain of $200m over the course of a few hours.
Other buyers have disregarded the cypher-punk anarcho-capitalist roots of bitcoin where early adopters viewed the blockchain-based tech as a platform for transactions in lieu of the physical dollar.
Looking forwards for Bitcoin
With bitcoin and the blockchain-based tech sector as a whole is in a major state of flux, Fallone seems confident that despite these incredible rises and falls in value, the platform has stability.
“You’re starting to see more and more Bitcoin derivatives or Bitcoin financial instruments pop up where you can do things like short Bitcoin, and they’re recognized as being valid,” he explained. Even established trading firms are confident enough to dive into the cryptocurrency world.
Demand seems to have been rising. Blockchain is becoming more ubiquitous, and major players like Fidelity are beginning to enter the game
Cryptocurrency has transformed from a niche, cyberpunk fantasy to a water cooler conversation topic and New York Times articles, and that’s certainly something.
Note: Jon Mareane is a data analyst and writer in Durham.