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aussie_striker (OP)
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April 12, 2013, 03:15:39 PM |
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GBBG Fund Managers Market Opinion
Posted: Friday, April 12th, 2013
Category: GBBG Fund
There is a good reason why investors such as Warren Buffett become multi billionaires while 999,999 out of 1 million people do not. The reason, most people are too fickle. When markets move down suddenly, the average person panics. They begin to fret over the losses, although only real when acted upon, and they act in self-destructive ways. As markets move up, investors such as Mr. Buffett relax, smile, and wait. When markets begin to turn downward, those like Mr. Buffett begin to smile as happiness fills their soul. Why? Because their favorite investments are on sale! They can buy what they want at a discount.
Such is the case in the past few days with Bitcoin. The fund managers at GBBG are smiling happily today as their favorite investment vehicle goes on sale. While the panicky, fickle masses jump on the ‘sell now’ bandwagon, GBBG fund managers are quietly building their portfolio. Like Warren Buffett, they don’t care so much what the market is doing ‘TODAY’ as much as what the market will do over the next 5 or 10 years.
GBBG fund insiders predict the current mini-pop to settle around $60 or $70 (USD) per BTC and then stabilize. Then, the fun begins again. They estimate the next ‘bubble’ will rise to around $400 or $500 (USD) per BTC before the next mini-pop. This is a natural occurrence that is expected at regular intervals over the next few years.
Bitcoin is a very new, untested protocol. Over the next few years, people will dabble with it with distrust. Merchants will slowly begin to accept it, but with hesitation. The price will rise and fall as the global marketplace learns how to tether this new currency into normal financial function. There will be panics in the marketplace. There will be bubbles. This is fully expected. Yet, over time, the trend should be upward if populations continue to adopt bitcoin as an acceptable form of payment.
Over the past few months, GBBG has introduced over 150,000 people to Bitcoin. We feel it is our responsibility to shed light on our Bitcoin belief system. We constantly monitor the various news releases and their various takes on the protocol. And, we constantly field questions from our membership.
Bitcoin Hacks
So often the media misrepresents the truth about hacking. Nearly 100% of the time, when a news release discusses a recent ‘hack’ on a product or service, they are entirely incorrect. When it comes to bitcoin, this is fully the case. Bitcoin has NEVER been hacked. Many articles have surfaced recently alarming the general public with reports of bitcoin hacks. While these articles do a good job of causing panic and short-sighted sell-offs, enabling our managers to purchase BTC at a massive discount, they are malicious lies.
Bitcoin is a protocol, like email is a protocol. It is not a company, a service, or an organization. In the four year history of Bitcoin, the protocol has functioned near flawlessly. With only a very few exceptions, such as the recent branch in the blockchain, the protocol has delivered above and beyond expectation. As a protocol, Bitcoin has never been ‘hacked’. Therefore, the fear mongering and misrepresentation of the general media is unwarranted.
The real truth is that certain individuals, through their own security flaws, have allowed their Bitcoin Wallets and the servers that manage them to be hijacked. Every single instance of ‘Bitcoin hacking’ that has been reported by the media is actually a hijacking. There is a major difference between the two. Hacking a system is the complex process of decrypting the passwords or other security measures in place to protect the system. Hijacking is the more simple process of fooling someone into handing over passwords and other details necessary to gain access to a system.
We have yet to see a true, definitive case of hacking within the Bitcoin protocol. However, because people are people, we have seen many cases of hijacking. The media chooses to report these hijacks as ‘hacks’ and uses this as a reason to distrust Bitcoin. In our opinion, they should also apply this philosophy to email. Since so many individuals have allowed their email accounts to be hijacked over the years, the entire world should discard and distrust email altogether. Their assertion that Bitcoin cannot be trusted or ‘valuable’ over time, because individuals have allowed their wallets to be hijacked is the exact same as the assertion that email cannot be trusted or ‘valuable’ over time because individuals have allowed their accounts to be hijacked. Both are extremely stupid assertions.
Bitcoin is a protocol. Email is a protocol. TCP/IP is a protocol. And, as with the early days of Email and TCP/IP, the Bitcoin protocol will have its ‘maturing’ and ‘vetting’ process. We urge our members to read carefully when idiots in the media report ‘bitcoin hacking’. A stupid fool who says Bitcoin has been hacked is just as ignorant as one asserting that Email has been hacked. If an individual does not take the proper security measures and they allow another individual to hijack their wallet, that is NOT hacking. And the fools reporting such in the media should be ignored.
Market Volatility
Bitcoin is a brand new protocol. There are far fewer merchants accepting the payment system as there are speculators participating in the ‘bubble’ effect. Because of this fact, we expect the Bitcoin market valuation to be highly volatile for at least 12 to 18 months. While the ‘basis’ for bitcoin valuation relies primarily on market speculation, no person can predict or measure what a bitcoin is really ‘worth’. Therefore, people will cautiously invest and hoard their coins (driving prices up) and then dump their holdings in short-sighted panic attacks (driving prices down). This cycle will continue as the protocol matures.
Our opinion is the day-to-day reactionary market is not the place to keep one’s eye. We feel the more determinant ‘valuation’ mechanism is the VC activity, entrepreneurial developments, and slow adoption of the protocol by real-world merchants. Very few established venture capitalists take blind risk. Most of them have informed reasoning when they make a move. This is why our belief in bitcoin is strong. There are established VC firms moving into bitcoin-based ventures. These people do not act on gut feeling or ‘whims’.
Volatility should stabilize over the next few years and normalize into a steady, yet slowly increasing, valuation. Why? Because mainstream merchants will be foolish to ignore this payment system, and as such will begin to adopt it. It makes financial sense, although only after volatility begins to stabilize and currency conversion is more practical. Why would any merchant want to give up 5% or 10% of their revenue to banks and payment processors when they can accomplish the exact same tasks for under 1%?
As major processors, such as BitPay begin to prove the value of this payment system to mainstream merchants, others will adopt more rapidly. The aspect of volatility and convertibility will be addressed by systems such as BitPay, which allow merchants to immediately (daily) convert their sales into real (cash) deposits in their banking accounts. Our belief is that the protocol is only just now beginning to see professional, experienced development. Until now, the majority of systems serving the bitcoin economy have been amateur. As the professionals enter the arena, the protocol will mature. Along with this, the marketplace. Along with this, volatility will stabilize and price-valuation will normalize.
Summary
Bitcoin is an excellent, yet infant protocol. There will be ups and downs. There will be moments of fanatical valuation increases. There will be moments of panicked sell-offs. The wise participants are those who capitalize on the long-term upward movement and resist the day-to-day pressures. When bitcoins are on sale, grab some!
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