Bitcoin Blockchain Landscape

Edson Lai, Queen’s Bitcoin Club

In 2016, Fintech companies continued to disrupt the status quo in the financial services industry as they still have not figured out how to fully integrate themselves with the rise of the Information Age. We can see the change happening in front of our very eyes as more and more startups are attacking what was originally thought as traditional, stable markets. Brokerage startups include Coinbase, BTCC , circle, and volabit. Trading platforms are being disrupted by Hedgy, tradewave, AlphaPoint, and OrderBook. The bitcoin/blockchain landscape is no different.

One of the major critics about bitcoin is the volatility in its price. 2015 marked a year of stableness as the bitcoin stayed within the $200–300 rate until surging near the year-end. Minimal fluctuation is needed if it is to be embraced by more users and businesses.

The real change and disruption was the uproar from the growing perception that blockchain technology could fundamentally change how we record, regulate, and process transactions. This paradigm shift has led several ideas on how to apply the blockchain technology in others areas besides bitcoins. Johann Palychata, a research analyst at BNP Paribas Security Services, commented that the blockchain could potentially remove the need for financial companies as it could be replaced as the central hub for post-trade infrastructure. This marked the first time a global institution recognized blockchain as disruptive technology.

These changes have been consistent with Wall St’s reception of blockchains in 2015. Jamie Dimon, CEO of JP Moragan has been quote that “silicon valley is coming” and the firm itself has already invested over $9 billion in FinTech companies including Prosper and Square.

Then there was the embracing of bitcoin by the media from The Economist, titled “The Magic of Mining”. The key message in the author’s perspective was that while bitcoin has not been fully embraced by the masses just yet, it has the potential to spawn other cryptocurrencies and innovations within FinTech that could fundamentally disrupt how commerce and finance works.

Nonetheless, Bitcoin has gained enough recognition that regulations have come into place to administer digital currency exchanges. In the UK, the HM treasury released a document with its plan to further support digital currency innovation while breaking down on anti-money laundering regulation. In January 2015, California became the first state to officially enforce and approve the use of bitcoin when it passed a bill AB 129. The US Commodity Futures Trading Commission (CFTC) acknowledged Bitcoin and other virtual currencies as commodities for the first time in September 2015.

Lastly, we are sure that bitcoin and blockchain technology will continue to grow as the userbase becomes more mature and more users realize the benefits of having a decentralized currency. Over $450 million of VC capital has been poured into blockchain/bitcoin investments and several global merchants have begun to accept it as a form of payment: Microsoft, Dell, Tiger Direct, and Intuit. Daily transactions have been on par with the largest tech payments companies. Bitcoins came in at $289 M while PayPal and Square dealth with $397M and $362M daily.

The attention from Wall St. and state governments has increased bitcoin’s legitimacy as a currency and commodity. This recognition will only further its growth as more users come on board the platform and exponentiate its development.