If you have yet to learn about Bitcoin, you are very late to the party. And Roger Ver was there when they tapped the keg.
Bitcoin, the most popular digital currency, is a new, peer-to-peer method of transferring wealth electronically. Ver is one of the most prolific Bitcoin investors, with investments in more than 10 Bitcoin companies. A self-described “Bitcoin Evangelist,” he currently spends his time travelling the world to explain the currency and encourage its adoption.
Ver first invested in Bitcoin in 2011, when it was worth about $1, according to CNBC. The price of Bitcoin is now stable at around $800 on most of the popular exchanges, and Ver has become one of the most prominent Bitcoin multimillionaires. He has made so much money that he even donated $1 million of it to an educational charity, in the biggest-ever Bitcoin donation.
World Policy Journal reached out to the man, whom many commentators call “Bitcoin Jesus,” for his thoughts on the phenomenon and its future. His appraisal of the new technology is frank and fearless:
“Bitcoin is the most important invention in the entire history of the world, since the Internet.”
Bitcoin = revolution?
Ver says that Bitcoin is revolutionary because it allows people to send money without the typical restrictions and fees of traditional banks and fiat (state-issued) money. As a libertarian and early Bitcoin adopter, he equates the currency with freedom.
“It’s the first time people can send and receive any amount of money with anyone else anywhere on the planet, regardless of what piece of land they happen to have been born on, or what color their skin is,” explains Ver.
“It’s impossible for any bank, corporation or government to block them from sending or receiving that money. It’s impossible for anyone to freeze their account; it’s impossible for anyone to control it in any way. “
And Ver seems certain that the price of Bitcoin will keep rising.
Positive price predictions
The price of Bitcoin reached an all-time high of more than $1000 late last year, after US policy makers blessed it in Senate hearings and adoption increased in China. But then a crackdown on the currency by the Chinese government caused the price to crash to lower than $500, as other governments around the world followed suit with their own regulations and warnings. The European Union and India both put out advisories against consumer use of Bitcoin, deepening the crash. Now, after recent news of adoption by big companies like Zynga and Overstock, the price has been stable at around $800 for about two weeks.
Ver thinks this stability could signal an impending spike in price.
“When the price has stayed in a very tight range, percentage wise, it can boom,” he told us.
“Recently, we’ve had another period of stability and calm with the price of Bitcoin. I think that might be the calm before the storm of the next big run-up in price due to additional adoption.”
When asked about the drivers of price, in the Bitcoin economy, Ver paints a basic picture of supply and demand. The number of bitcoins is limited to 21 million, and as such the price of Bitcoin – in traditional currency – will continue to rise so long as additional users adopt it and create more demand.
But some players in the Bitcoin game matter more than others. Ver thinks that adoption by bigger, more traditional institutions could cause significant spikes in price.
“I’m sure PayPal, Western Union, and Bank of America are watching closely. Whether or not [smaller exchanges] stay depends on what other companies, traditional banks and PayPal do. If PayPal wants to come and be the 300-pound gorilla on the block, they can do that at any point."
What about the FBI?
The FBI currently controls two of the largest Bitcoin wallets on the Internet, seized from the Silk Road digital black marketplace and its alleged founder Ross Ulbricht. To some backers of the currency, this is cause for concern. Federal authorities in the US were recently given the go-ahead to liquidate a wallet containing about 30,000 bitcoins, worth around $25 million.
If Bitcoin erodes established corporate and state powers, it could stand to reason that the FBI might want to bring it down. But Ver thinks the feds are not out to crash Bitcoin.
“The FBI are incredibly misguided, but they are not stupid. So they are not going to just sell all of their bitcoins instantly on one exchange and intentionally crush the price,” Ver says.
“They said very clearly, in their press releases, that Bitcoin has lots of legitimate uses. There is no evidence whatsoever that the FBI is out to destroy Bitcoin.”
Ver thinks that the US Marshals Service will simply auction off the Bitcoins to individual buyers, who will happily sell them for higher prices on exchanges. He is also grateful for the positive stance the US government has taken toward the currency so far.
“Bitcoin is unstoppable, it could only be delayed by politicians, and it looks like at this point they are not even trying to actively delay it.”
With regard to the elephant in the room that is the FBI, it stands to reason – based on Ver’s testimony – that they would rather liquidate assets efficiently via auction than topple an entire digital economy. And, given the broader positive stance of the US government towards Bitcoin, it would be surprising if the FBI took a drastically different approach. But this is merely postulation, and, even if the FBI does not exert their power over Bitcoin in a negative way, government institutions in China and beyond may not be so kind.
Ver’s most important contribution, in terms of shedding light on the future of Bitcoin, is to comment on the apparent stability currently being enjoyed by the digital currency. On the Bitcoin price chart from the past year, sizeable booms followed its two periods of relative stability. He does seem to have a point, in predicting another spike.
Ver clearly thinks you still have time to crash the Bitcoin party.
Trevor Dougherty is an editorial assistant at World Policy Journal.
[Chinese flag picture courtesy of dcmaster]
[Bitcoin chart courtesy of bitcoincharts.com]