Bitcoin is being built around an Internet Protocol, The Blockchain, that can’t be shut down. It exists in cyberspace where no Government or other Regulatory body has any chance at all of halting its progress.

The Blockchain is a protocol that is not just specific to Bitcoin, but a protocol that will, in theory, enable us to establish trust in society, in a totally new way.

The Blockchain is a “Peer to Peer” network of independent nodes, or computers, each of which can pick up data anytime they power up. There is not a “Hirer” to be seen.

The Blockchain is totally Open Source and operates as a Meritocracy.

He who can control the Global Money supply rules the World. As a meritocracy the Polymaths, the greatest minds in the World today have found their Everest and nothing is going to stop them now.

The Blockchain is a huge database without any one computer or organisation being allocated operational control.

However, whilst the Blockchain can have many applications, the same does not apply to Bitcoin which, as of today, despite its successes of the last 8 years, is now starting to creak.

Unless something changes, Bitcoin and its various derivatives are going to be relegated to just another form of speculation or trading on the exchanges.

7 Network Effects Driving Bitcoin Hyper Monetisation

1. Speculation – to achieve the extraordinary rate of hyper monetisation experienced by Bitcoin you need speculators, lots of them, and the timing needs to be right. Post Lehman Brothers everything was perfectly poised. You will need to be able to secure Bitcoin, hence wallets; and trade them, hence exchanges
2. Merchants – In theory at least, merchants need to accept them and consumers need to spend them. I’m not convinced that’s happening fast enough which means that the “Gamblers” are left to speculate. Rest assured though, where there are winners, there are always a lot more losers.
3. This I think is where the theory and the practice, part company. Consumers can only start to use Bitcoin as a currency as the merchant base expands.
4. Miners – can the Speculators keep the miners happy so they are more inclined to invest more as the price of Bitcoin starts to grow? (Blockchain today uses as much electricity as the entire country of Macedonia, a country of 2m people, that’s how much money is going in to securing the Blockchain)
5. The Developers of the Blockchain, the Polymaths have their perfect Everest, with a Protocol that has so many diverse applications. The same cannot be said for Bitcoin.
6. Financialisation – ledgerX, etf’s
7. World Reserve Settlement Currency – Establishing trust with Liquidity, Security and Scalability. Is this ever likely to happen?

The soaring value of bitcoin and other cryptocurrencies comes despite growing warnings over a price bubble.

The starkest warning came from the JP Morgan chief executive, Jamie Dimon, who said bitcoin was a fraud that would ultimately blow up. Speaking last month, he said there was a limited market for the digital currency, arguing that it was only fit for use by drug dealers, murderers and people living in countries such as North Korea. He pledged to sack any JP Morgan trader investing in Bitcoin, but also admitted he had not been able to dissuade his daughter from investing.

Dimon declined to comment on the surge in bitcoin during an earnings call on Thursday. “I’m not going to talk about Bitcoin any more,” he said.

Kenneth Rogoff, a professor of economics and public policy at Harvard University and a former IMF chief economist, has predicted that the technology behind cryptocurrencies will thrive, but the price of bitcoin will collapse.

“It is folly to think that bitcoin will ever be allowed to supplant central bank-issued money,” he wrote in the Guardian this week.

“It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes or counter criminal activity.”

The price of a bitcoin can unpredictably increase or decrease over a short period of time due to its young economy, novel nature, and sometimes illiquid markets.

Consequently, keeping your savings with Bitcoin is not recommended at this point. Bitcoin should be seen like a high risk asset, and you should never store money that you cannot afford to lose with Bitcoin.

Protect yourself at all times, take responsibility for your own financial affairs and never speculate any cash you cannot afford to lose. In 2017 you will need to be a massively sophisticated Bitcoin expert to have any chance  of understanding what is going on.