From news channels to dinner tables, cryptocurrencies such as Bitcoin are once again the center of financial discussions. The price of many cryptocurrencies — digital currencies based on top of blockchain technology — soared by 100s of percent in the last few months. Bitcoin, for example, breached its previous all-time high of $20,000 and set a new record of almost $42,000.
While the 2017 bull-run was said to be pumped by retail investors, the present one is fuelled by institutional money. Many major institutions recently joined the crypto bandwagon, investing hundreds of millions of dollars to diversify their portfolios. Retail investors too have been quick to see the opportunity and invest in their favorite cryptocurrencies.
Joel Edgerton, the COO of a San Francisco-based cryptocurrency exchange, bitFlyer USA, indicates one of the major reasons why people are investing in cryptocurrencies is that they create a fairer financial system. Edgerton, who previously worked with many major financial institutions across many countries, decided to join bitFlyer after realizing the impact blockchain and cryptocurrencies can have on the present financial system.
Edgerton is currently the COO of bitFlyer USA, a subsidiary of the largest Japanese cryptocurrency exchange bitFlyer. He explains that he joined bitFlyer over other cryptocurrency exchanges because the company’s vision and mission closely align with that of Bitcoin.
bitFlyer’s focus remains on adding value to its customers rather than working like casino exchanges that mainly vie for profits by luring new users through high-risk investment opportunities. Through bitFlyer USA, Edgerton aims to bring better values into the American crypto markets, which is currently overloaded with exchanges taking unfair advantage of its users.
As the craze and demand for Bitcoin and cryptocurrencies grow stronger, Edgerton sheds light on various aspects of cryptocurrencies by answering some critical questions about their use and adoption. Let’s dive in.
Why is Bitcoin’s demand growing so rapidly?
Bitcoin belongs to a relatively newer asset class that is still in the long-term price discovery phase. The most similar asset class to that of Bitcoin is gold, which is why Bitcoin is also often referred to as digital gold, notes Edgerton.
Bitcoin has a clear path forward as a replacement of gold, but it currently only has a market capitalization of $650 billion as compared to roughly $11 trillion of gold. So, there’s plenty of room for competition, he adds.
It is worth noting that institutional investors are together moving billions into Bitcoin. A major reason for doing so is that Bitcoin is a good hedge against government debasement of fiat currencies, i.e., the printing of more money leading to higher inflation.
Now, Edgerton states, the printing of more money is generally an advantage for asset classes like gold as a store of value. And Bitcoin exhibits…