There is a lot of smoke around Bitcoin. There seems to be a new story each week about a startup or some sort of project. This week, it was a story around Digital Asset Holdings. It’s a new effort to bring some order and discipline to the Bitcoin marketplace.
As big hedge funds chase what’s called “alpha”, Bitcoin trading offers them an outlet to assume some risk and find some alpha. However, because the ecosystem isn’t developed or even stable, the opportunity cost for hedge funds entering is pretty high.
There has been a fair amount of VC money injected into various Bitcoin firms. So far, none of it has proved out much. Before you dance on the ashes of Bitcoin remember it’s still extremely early in the game. I think it’s important to remember we have a hyper kinetic 24 hour news cycle. Imagine if we had sort of news cycle when Edison invented the light bulb or Andreessen invented the internet browser. Their failures would have been magnified to a far greater extent, and analyzed with far greater cynicism.
In the US, it is hard to see huge potential for Bitcoin as a currency. But, that is not the case in other countries.
However, there is massive potential for the blockchain. The short term problem is that there is no usable piece of software out there yet that makes it come alive for the masses.
But, I believe it’s coming. Five years from now the world 0f finance will look a lot different.