Bitcoin Price Will Grow Exponentially in 2017

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Discussion Points:

  • Global Uncertainty
  • Upcoming French elections
  • Trump Picks Mick Mulvaney as a budget chief
  • SEC (Securities & Exchange Commission) will likely approve Bitcoin ETF
  • Bitcoin as an Asset class could help balance Hedge Fund investment portfolios in 2017

Trump’s plan to increase infrastructure spending, three rate hikes in 2017 can cause the dollar to exponentially strengthen & the strong dollar will force emerging markets to go after alternative currencies.

Where Bitcoin can be seen as their first choice of digital currency.

French elections outcome can possibly trigger the Frexit as there are more chances of Marine Le Pen becoming the next president of France.

Her divisive rhetoric, strict policies towards immigration & leaving the European union could create more uncertainty in Europe which may boost the price of Bitcoin exponentially.

Pro-Bitcoin Mick Mulvaney has been appointed by the Trump’s administration, who is a big believer of Bitcoin & Crypto Currencies. He is an active & vocal supporter of Bitcoin & Block chain technology. So this makes a good probability of getting approval of Bitcoin ETF from SEC in near future.

Now let’s talk about how it can be beneficial for big Hedge Funds. Bitcoin is consistently the lowest correlated asset to other asset classes in the markets, which can make a great diversification in their portfolios

& always bring good returns for their clients. Even if their traditional assets are at breakeven levels, remember there is going to be more uncertainty ahead & nobody knows how Trump trade policies are going to affect the Global markets.

I see more & more potential in bitcoin price growth, because there is going to be an insane demand for bitcoins from Hedge Funds.

We call it Smart money & Smart money is going to move the Digital currencies market in 2017.

I more likely see the price of Bitcoin going beyond $2000 in near future.

By Amaan Pathan currency strategist & forex trader


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So, you are one of those who managed to save a little money from the blood-sucking economy that is hell bent on ruining out status of living, and now you want to know as to what could be the best investment? First of all, we would like to congratulate you upon saving some funds and asking for expert opinion. Well, as far as investment is concerned, the typical Pakistani mindset would always think of a few things: prize bonds, dollars, gold or real estate. The last one is the best, but it does not apply to the middle class Pakistanis. As compared to prize bonds, dollars or gold, property takes a lot of money.

Bitcoin
Well, before we give our opinion, let us have a look at another option that most of the people are not aware of, but that has made SOME big waves. This is bitcoin, the digital currency which is skyrocketing with passage of every week. The chart below shows, there was a very slow growth in early years of Bitcoin. The price if we consider 2014 as the base year the price has seen a steady increase of about 300%.

btcmarket-price-usd

In 2010 the price for one Bitcoin was $0.008 and it first made an impact in mid-2013 when it touched the barrier of $250 per Bitcoin. From then onwards, it was a steady rise and the climax was when Bitcoin crossed the psychological barrier of USD 1000, back in the fall of 2014. After that it was a speedy decline, but Bitcoin showed some resistance and today one Bitcoin is worth $740+. If you have a look at the other chart, you’ll see that weekly local Bitcoin’s volume in PKR is still more than PKR 1,600,000.

coin-dance-pkr-volume

Real Estate
Now, let’s have a look at real estate. Well real estate certainly guarantees increase in annual revenues. The price always go high, apart from a few exceptions. Let us take a look at this chart. The average price of residential property is PKR 9,931 per square feet and it is only going up. Market shows a very steady growth from 2011 to 2016. Price per square feet index shows that in 2017 the price per square feet index will cross the psychological barrier of 10,000/square feet. If we consider the same time frame in Pakistan the price of property has grown on an avg of 40% depending on which locality you have invested. Which means you have to be well aware of the local before you actually invest.

property

Gold
Gold investment has not been a very good choice for a long time. If we have a look at the chart, we can see that back in 2012, the gold price per kg was more than $57,000 and then there was a tendency of falling gold prices; the price was at its lowest in a period from Jan 2012 to July 2012. It descended to $50,000 per kg and then was a sudden rise. The highest gold price was noticed before January 2013, when the price almost touched the barrier of $58,000/kg. From then on wards, it is only a falling action. In late 2013 gold price set a new barrier: $42,000 per kg and for some reason the prices have been mostly around this figure. The price of gold on the other hand is below 10% increment if an investment was made in 2014.

gold-prices

 

Inflation Rate
Another important factor is the inflation rate. Our inflation chart shows us how Pakistan’s inflation rate is fluctuating. Back in 2014 the serious efforts of Government resulted in a steady decrease in inflation rate and it descended from more than 5% to 4%. In coming months inflation descended to an ever lowest 2% but it soon went upwards and around June 2015 it was more than 3%. Then we noticed another decrease and by the mid 2015 it was at its lowest. Since then on wards it was only an increase and as per the latest statistics, in the fall of 2016 inflation rate has crossed the psychological barrier of 4%. However, that was not a long-lasting success and very soon inflated started to rise again. When compared to the record low inflation rate: 3.40 percent in September, 2015, this new inflation rate cannot be described as anything short of horrifying and unnerving. For a common man a simple equation means that if you bought a a loaf of bread in 2014 it would be 8% cheaper to buy then roughly. This also shows that currently the PKR is on a year to year decline in value and hence the buying power is decreasing so keeping value in fiat currency in Pakistan is an automatic no go.

inflation-rate

So, the question remains the same! To invest or not to invest? And if to invest, where? I leave that upto you, if you look through the charts and percentages you would see how important investment is for the future, and keeping funds in fiat currency might be the worst idea. We did not take into account saving accounts here but the interest rates on profit rates(if we are talking islamic banking) have steadily falling and is less then 8% per anum.

Writer: Bilal Ahmed
Editor: Danyal Manzar
Charts Source: Coin.dance, blockchain.info, zameen



Bitcoin & Blockchain has caused a commotion in the banking world. It is only right to give discusses the prospects of blockchains and bitcoin with retrospect to Pakistani markets.

So what is blockchain?
While I was thinking of answering this question, I figured its important to define bitcoin first but then I realized that its important to touch this matter first so people get a better understanding what it is and why its important before getting into bitcoin.
Blockhain is a ledger. An empty ledger which keeps records on pages in our regular accounting terms which is time stamped and encrypted. For a the tech savy think of it as big database that is stores information in a distributed decentralized manner.

Oky So what is bitcoin and why is it less important then blockchain?
I believe that thinking that its more important then bitcoin might be a bit premature. We have to really deep dive into this to understand the what and the why. I will try not to get to technical on this and keep it simple for the average person to really understand the technology. Bitcoin was created by satoshi nakamoto it is simply a token on the blockchain which denotes its ownership to the person who holds the wallets public and private keys.

Now to touch on the fact why is it important. For this I think its very important to understand current banking structure. Banks use local central bank in this case State Bank Pakistan to clear and settle their inter day transactions. While most funds are held at head offices and transactions are done by physically delivery when settlements need to take place. Blockchain presents an interesting aspect where you can have a token and take ownership as when you work blockchains you dont really send or receive anything, the only thing that is happening is that ownership of the token is exchanging hands. Hence something that belonged to you now belongs to me. Once this happens a time-stamp is put on the ledger denoting the change of ownership. This is then verified by miners or ledger holders in a distributed manner so that all records are updated on all ledgers.

The one advantage this has is saving overhead costs of running a central server with a central point of failure. Banks and financial institutions are looking at this from the prospective of settling payments over a central permissioned / primisonless blockchain. However security for such chains will always be an issue. It imperative to note that bitcoin blockchain is the most secure open database in the world. You can use it to store records, transact it like funds or even just use it for means of trade. We have seen decentralized encrypted storage to validation of legal documents. Since if you want to hack the blockchain you will have to pretty much have to hack 51% of the entire systems running the bitcoin blockchain.



Enter Smart Contracts:
While smart contracts are new, they basically allow programming into the blockchains. These are still very new and not very secure. We can read up on Krypton hack and DAO hack over ethereum which is a smart contract based platform. These contracts can also be programmed over the bitcoin blockchain which makes it very powerfull. Something like rootstock, omni or counterparty allows you to that. What you can do with these have and endless possibilities and too long for discussion of this post.

Use Case:
The case that I really wanted to touch on was easypaisa, upaisa jazz cash and the likes of such. Like M-Pesa in Kenya, these mobile branchless banking services have helped cater an unbanked sector of Pakistan. While it is still very new, its catering to people who dont have access to bank in their home town. The design is such that they sign up merchants which could be a local store in any locality and allow them to cash in cash out money from a near by store rather then a bank. Pakistan having a banking penetration of around 16% only has seen its growth due to the introduction of such services. We have seen additional 4% now using the easypaisa type services in Pakistan.

The problem with this type of setup is overhead costs. The servers are subject to frequent breakdowns, in addition a hack could result in a catastrophic event on the micro finance bank offering this type of service. Shifting to a blockchain based setup and implementing a smart contract based token over bitcoin blockchain could result in using the most secure distributed database in the world with no point of central failure. The transactions will happen over the bitcoin blockchain without the need of a central server.

A private blockchain or a public permissioned blockchain can also be implemented which will require all agents of the network become custodians of the blockchain. The overheads of this type of setup while less secure is still very cheap as a simple $35 raspberry pi could even handle the entire node(or ledger at a local agent level). You could also implement this in a way where your local transactions are happening on the local chain but at the same time you allow remittance over bitcoin on your local network. This could in turn save millions to the local financial service providers while enabling a 24/7 network. I have tried to keep this article as close to explaining in English as possible. The technology implementation may not be as easy but can be done depending on what methodology is chosen at time of implementation.

Bitcoin Volume

The more we discuses bitcoin and understand the possibilities it brings forth for Pakistan the more converts we have. This is now showing in trading volumes across different mediums of trade.  If we just check the localbitcoins volumes during last few weeks we see upward movement this not only true in Pakistan but through out the world. The increase in volume has also resulted in increase in numbers of users. As we see more localbitcoin traders poping up on localbitcoin and facebook almost daily.

Localbitcoin

coin-dance-PKR-volume

Urdubit

Talking to Mr Zain Tariq co-founder at urdubit the one and only bitcoin trading platform in Pakistan, it was informed to us that the volumes at urdubit have seen a steady climb and last month alone over 130 bitcoins have been traded uptill 26th Feb, The most they have done in any running month since the formation of the exchange. We were also informed that urdubit itself registered 1000 users in February which is almost 900% increase of previous months. It seems that Pakistan is now entering the age of bitcoin slowly but surely.

urdubit statistics

This is good news for freelancers, white-hat security experts and developers alike. This surge has partly been caused by users who are receiving international payments as absence of paypal in country like Pakistan have been widely publicised.

Bitcoin as a payment method is being used world wide, and with increasing number of users coming onto this, trading and services built around bitcoin in Pakistan is also increasing.