Over the last six months, Bitcoin has been on a constant upward rise. Experts wonder: will it eclipse gold’s market cap in the years to come?
With Bitcoin making headlines again in 2021, one might be inclined to say that the volatile nature of this 12-year-old social experiment is not that volatile in the long run.
“We are now seeing more institutional investment come into play, with greater investments and interest in crypto from some of the biggest names in the business – Visa, Facebook, PayPal, Square, JP Morgan… This is going some way to allaying the doubts that have previously undermined Bitcoin,” says Marius Reitz, the General Manager for Africa of Luno, the global cryptocurrency exchange that added almost a million new South African customers during 2020, and over 250,000 so far in 2021. It recorded $8.3 billion in transactions worldwide and processed nearly $3 billion in volumes in South Africa last year.
In February, South African-born billionaire tech entrepreneur Elon Musk, the founder of the electric car company Tesla, announced a $1.5 billion investment into the cryptocurrency. One of the reasons behind this considerable investment was to enable the company to have the right kind of liquidity when it starts accepting payments in Bitcoin.
“If you look at Bitcoin now, over the last six months, it’s been on a constant upward rise with very little volatility in hindsight. Where in the past, we used to have 40% corrections, the largest correction we’ve seen in the last few months has been 25%. So I am not sure that volatility applies to a technology that is already starting to get adoption,” offers Ran Neuner, a South African cryptocurrency investor and the co-founder and CEO of Onchain Capital, a Blockchain investment fund and advisory service.
Bitcoin was created with the objective to be a new type of currency, a replacement for traditional FIAT currencies (government-issued currency not backed by a physical commodity such as gold), however, it has become a store of value, over being a currency.
“My feeling is that within the next three to five years, Bitcoin [will] take over gold’s market cap.” – Ran Neuner
Bitcoin is now considered to be the new gold. Gold has been a store of value for centuries now and currently has a market cap of $11 trillion. Since Bitcoin’s conception, its market share has grown to $1.1 trillion over the past 11 years.
“My feeling is that within the next three to five years, Bitcoin [will] take over gold’s market cap,” adds Neuner. “The question is what is gold’s market cap going to be then? The answer will depend on how many US dollars are printed and if the US keeps printing US dollars, then gold’s market cap could be $20 trillion, but my opinion is that Bitcoin will eclipse gold within the next three to five years.”
Compared to 2017 or 2018, we are starting greater adoption and usage of the cryptocurrency market as a whole with Bitcoin driving the market. The more large companies like JP Morgan or Tesla take on assets like Bitcoin to their portfolio, the greater its adoption by the greater public and with some investors making claims that Bitcoin will rise to $140,000 per coin.
“We are now seeing more institutional investment come into play, with greater investments and interest in crypto from some of the biggest names in the business.” – Marius Reitz
“I really do think whilst others are talking about Bitcoin, there’s a lot of other cryptos and decentralized finance networks that are doing spectacular things, if you just look at Ethereum as the second crypto, there are more use cases for that ecosystem, and that ecosystem is growing at a phenomenal pace,” says Ian Ferrao, a telecoms executive currently serving as the Regional Director for East Africa at Airtel Africa. Ferrao is a cryptocurrency fan and spends his spare time researching and investing in various crypto tokens, liquidity mining projects and NFTs (non-fungible tokens).
Bitcoin seems to be what began paving the way for the cryptocurrency market, and over Ethereum.
With the next biggest crypto mirroring Bitcoin, it is safe to say that Bitcoin still is the daddy of all cryptos and really before you can get into the whole market of cryptos, one first needs to get into Bitcoin.
Sadly, there are a number of scams engulfing the cryptocurrency space, so investors need to be guarded.
“We encourage responsible investing which includes never investing in something you don’t understand, and never spending more on speculative technologies like Bitcoin than you can afford to lose. We also recommend making a small investment initially if you are unsure so that you can familiarize yourself with the Luno platform and the cryptocurrencies on offer. We do expect further volatility in the crypto space, so we advise care and encourage people to learn more about cryptos,” says Reitz.
If you are interested in buying Bitcoin, but do not know how to do it safely, here is a step-by-step guide on how to go about it.
Step 1: Get a Bitcoin wallet. This can be downloaded onto either a PC or smartphone. The wallet is there to store your Bitcoin in the same way you would keep cash in the wallet in your back pocket.
Step 2: Buy Bitcoin. You’ll need to go to a cryptocurrency exchange in order for you to turn your FIAT into Bitcoin. The best exchange to use would be dependent on the country you live in, if you are based in Africa, the best option would be Luno as it is the only registered exchange on the bitcoin.org website. A list of all exchanges can be found in the same place.
Step 3: Move your Bitcoin from the exchange to your wallet. The exchange should give you a temporary wallet to store your crypto from which you can send the crypto to your personal wallet. This is the most important step as it is highly advisable not to keep your crypto in an exchange due to the potential possibility of the exchange getting hacked and all your crypto is gone with the wind.
The writer too has some experience in this area, having bought my first Bitcoin in February 2018, valued at around $8,000 per coin at the time. In March last year, when the Covid-19 pandemic hit and more people began investing their money into Bitcoin, I decided to have a look at what mine was worth. In just over two years, the coin value had climbed to an all-time high of around $45,000.
With stability becoming a bigger part of Bitcoin, it is clear that this asset is an investment that shouldn’t be overlooked even if it’s not understood. Bitcoin’s profit potential is speculated to continue soar and now is a great time if there were any to buy some Bitcoin. Watch this space for more on what looks to be the future of money.
By Peter Engelbrecht