It goes steeply upwards for the bitcoin course - the question is how long yet? Already warners warn of a bubble. What is behind the euphoria about the Internet currency and what the risks are.
With a seven-member delegation, Federal Councilor Ueli Maurer joined Bitcoin Suisse in Zug last week. Everywhere there are screens, on which course runs are to be seen. And always the curves go from the bottom left to the top right. Bitcoin Suisse - the largest Swiss broker of Bitcoin, Ether, Tezos and other new digital currencies - is currently being overrun by customer requests.
"Where should we regulate and where exactly does not?" Asks Federal Councilor Maurer the Bitcoin Suisse. He and the delegation have a look at the rapidly growing crypto industry with its opportunities and risks for Switzerland . The tone of the debate is moderate, clarified, the price explosion at Bitcoin for the Federal Council is not an issue.
Amazing hysteria
Elsewhere in Switzerland, there is hysteria about the increase in value of Bitcoin to over 4000 dollars. The one media clears free space for proclaimed course targets of 100,000 dollars, others speak of «crypto-nonsense», third blasphemes about the phenomenon with chain letter analogies. The crash is near , the tenor is often. The sound becomes clearly more ugly. It seems that world images and ideologies are at stake.
It is clear that there is no such thing as a "fair price" from Bitcoin. Bitcoin has no intrinsic value. Although bitcoins are generated by means of a large computer power, it is absurd to calculate the current costs in order to calculate the value of a bitcoin.
Only supply and demand determine the price
The price of Bitcoin is determined solely by supply and demand on the dozens of exchanges worldwide. Of course, there are reasons why demand is increasing. First of all, there are two features that make Bitcoin attractive. First, there will be a maximum of 21 million Bitcoins according to the program code. Bitcoin has no strong central bankers like ECB boss Draghi and Co., who can open the moneylocks. This is good news for all those who are afraid of a monetary expansion in the dollar, the euro or the Venezuelan peso.
The second property is: No authority, no one can confiscate bitcoins. This appeals to many people in Russia, China, India who fear or suffer from capital market controls when large banknotes (such as in India) are declared invalid. And, of course, criminals are also fond of operating outside the banking system.
Turnover on exchange trading as an indicator
A good indicator of the actual demand for such non-speculative reasons are the sales at local exchange exchanges, where cash is increasingly exchanged for bitcoins. Over the past three years, Russia, India, Venezuela and about fifty other countries have been steadily increasing and accelerating. Incidentally, Switzerland was by no means surprising - at least surprisingly - an increase. With the security of the franc in the background there was never any need for it. But bitcoin is global. And there is no evidence that these two top features of Bitcoin are losing their appeal.
But without the massively attractive speculation on further rising prices, Bitcoin would not have risen so fast. Crypto-clocks worth 6 billion dollars are now traded daily on the exchanges. A family office bought bitcoins for 40 million euros. For how much longer? Nobody knows. But not all family offices and institutional investors have long since invested in Krypto. Bank products for private investors are just being launched. The US company Coinbase, valued at 1.6 billion US dollars, opens an account every day to buy the new currencies. The boom can continue. It is equally clear that speculative demand will eventually break in, and thus also the price.
Switching gold into bitcoin
When, nobody knows. It is also possible that a long-term conversion of gold into Bitcoin has begun. At least institutional investors have deducted 30 billion in gold investments over the last ten weeks. What is regarded as a "store of value", a value preservation tool, is always a long-term, social consensus. No one can say today whether such a consensus for Bitcoin is the first rare digital raw material. Such processes can take years and decades, but would support bitcoin.
Crucial, as always in money questions, is the trust of the people. Once it is shaken, the course drops immediately. This is especially true for such phenomena as cryptic diseases.
The biggest risks to Bitcoin are clearly political, both within and outside the Bitcoin world. Bitcoin has been running smoothly for nine years since all of the server farms that secure the network worldwide are more likely to earn money than they do want to lose. And the operators of the server farms earn money only if they adhere to the rules in the network. This is Bitcoin's best: Bitcoin works as long as the majority of network-savers want to earn money.
Bitcoin is a policy without a clear majority
But now the normal capitalist urge for the formation of oligopolies has reached Bitcoin - and there are only a few, but gigantic server farms in China. The concentration makes the network more vulnerable to attacks. For example, it would be easy for the Chinese government to force operators of these farms to slow bitcoin referrals. The impact on the course would be drastic. Bitcoin could also be a new cryptic threat. Some protect privacy better, others allow more transactions, third offer new applications. For comparison: Myspace was the first big social network and still lost against Facebook.
Clearly, only a linear rise of Bitcoin, a conflict-free adoption by the masses will never happen. Only the various factions within the Bitcoin industry, with their different views on how Bitcoin should be further developed, should be taken care of. Bitcoin is a policy without a clear majority. This will be one hundred per cent in price fluctuations - the only reliable forecast.
Forecasts were not made at the meeting of Federal Councilor Ueli Maurer at Bitcoin Suisse. For this he took two messages back to Berne: Finma is doing a good job in regulating the new industry. The main problem is
grants for top workers from abroad. The meeting with the finance minister lasted 45 minutes. During this time, the value of all bitcoins increased by 650 million dollars.