[Bit]coin flipping: “I see Bitcoin like the Internet was in the 90’s”
Bitcoin continues to hit the headlines as the price nears $600 and the halving is almost upon us. We talked to Henry Brade, the CEO of Prasos Oy, a Finnish Bitcoin startup founded in 2012, about the hike and the reasons why people should invest in bitcoins now.
Let’s call it a deja-vu. Bitcoin price passed the $500 threshold in late May, something which hasn’t happened in almost two years. Despite reports that it will drop once again, the price is still going strong —at press time, the price continued to increase and almost broke the $600 threshold. The most beloved scenario is that fears in China that the yuan could weaken may have something to do with the sudden growth. China’s decision to restrict the flow of cash out of the country has indubitably prompted concerned citizens to seek ways around capital restrictions and Bitcoin proved to be a sort of safe haven.
But let’s allow Henry Brade, the CEO of Finnish Bitcoin startup Prasos Oy, to weigh in on the price increase and the growing importance of blockchain.
JAXenter: You have been a Bitcoin hobbyist since April 2011, so one can say you are an early adopter. How is your love affair with Bitcoin going? Are you happy with its course?
Henry Brade: I’m satisfied with how things are progressing. There has been a lot of drama recently especially related to scaling Bitcoin but I think there is progress in that regard and it does not seem to be stopping the avalanche that Bitcoin is. There is simply too much demand for a monetary instrument like Bitcoin. It’s not going anywhere and it’s only getting started. I really see Bitcoin like the Internet was in the 90’s.
I’m expecting the price increase to continue in the mid-term, although there may be corrections and pauses occasionally.
JAXenter: Bitcoin price recently passed $500 for the first time in almost two years. Why do you think this happened?
Henry Brade: Just a matter of time. This is the way Bitcoin grows, through a series of ups and downs. I saw this in 2011 for the first time and in 2013 for the second time. This is expected. The rise can be attributed to certain specific reasons such as the increase in demand from China and the halving of the Bitcoin block reward but in essence I think it’s just the way Bitcoin market works. I’m expecting the price increase to continue in the mid-term, although there may be corrections and pauses occasionally.
JAXenter: Do you think this hike was a one-time thing or it may happen again in the near future?
Henry Brade: I think it is clear that Bitcoin is no longer in a downtrend. That was a debated subject for a long time but now the price is high enough that it’s hard to justify a downtrend any longer. Everything from Bitcoin economy fundamentals to the price development leads me to believe that it will certainly not be a one-time thing.
JAXenter: Why should people invest in bitcoins?
Henry Brade: Bitcoins are a new type of financial instrument. Unlike any other. This digital currency is not strongly linked to other assets in the traditional economy and that makes it a great hedge for everything else. Bitcoin is likely to benefit from any financial problems in the world and thus it makes sense for anyone to diversify into bitcoins. Not much necessarily, I would recommend starting from 2 to 10 percent of ones investment portfolio / savings budget. It may also be a good idea to buy bitcoins not all at once but spread out through time.
Bitcoin is no longer in a downtrend.
JAXenter: What do you think about the fact that blockchain is slowly outgrowing bitcoin?
Henry Brade: The “blockchain phenomenon” is only outgrowing Bitcoin in hype. Not in actual usage or market value. Of all cryptocurrencies Bitcoin still holds over 80 % of the market value, with Ethereum in second place at 10 %. And if we look at the real life use of blockchain applications, I’d say Bitcoin usage is 99 %. There are many interesting projects going on related to blockchain, but Bitcoin is not going anywhere. The currency application of Bitcoin is hard to challenge. Alternative blockchain applications will likely focus on other things. That leads to my conclusion which is that most alternative blockchain projects are not competitors to Bitcoin, they are fulfilling a completely different purpose. That is important to understand.
JAXenter: What is the unique selling proposition of your company Prasos?
Henry Brade: We operate multiple Bitcoin services under Prasos and the most interesting ones from an international perspective are Coinmotion and Denarium. Coinmotion is a bitcoin exchange platform currently focused on the European market. It allows people in European countries to easily and securely buy, sell and store bitcoins. It is especially suited for regular people who want to invest in bitcoins. Denarium on the other hand is about physical bitcoins which are actual coins with bitcoin value. The coins are a secure physical way of storing bitcoin value and the concept can be understood easily. The bitcoins are safe as long as the coin is kept safe which makes the coin the ideal way of storing bitcoins especially for the older generation.