Is Bitcoin a Good Investment? Phase 3: Bitcoin Mobile Payments
July 19, 2019
Lead Tech Analyst
Institutional adoption of bitcoin and economic uncertainty are two phases previously discussed in this series that evaluates if bitcoin will make a good investment. Finding the right entry price is critical for a buy and hold strategy as there is unusual volatility in this asset. Trading bitcoin may be successful for some; however, this series predicts that holding bitcoin until the technology matures is the better option – all of which is dependent on the right entry price for this volatile, yet high-potential asset
Bitcoin is not trading at support levels and there will likely be a better entry later this year. Also, this is a mix of tech analysis and my opinions; not financial advice
The third phase that will contribute to bitcoin’s potential as an investment will be the adoption of crypto wallets and crypto payment transactions. Today, bitcoin is a speculative play. The tipping point will occur when bitcoin is used for transactions. Psychologically, bitcoin will have a permanent place in society when this occurs, and the value of bitcoin will reflect this due to the limited supply of the coin.
Bitcoin and Free Markets
Bitcoin’s ultimate opportunity will be reached when the coin provides seamless and low-cost digital transactions. Opponents to bitcoin believe central banks and governments will create obstacles that cryptocurrency cannot overcome. However, the free market is already moving towards capitalizing on bitcoin as many corporations do not want to miss out on this opportunity.
As discussed, Starbucks is partnering with Bakkt, and this will create a payment gateway for the security-backed exchange. Keep in mind, Starbucks’ payment app has more users than Google Pay or Apple Pay
Several more online retailers are currently accepting bitcoin payments, such as:
- Wikipedia accepts donations in bitcoin
- Expedia accepts bitcoin through Coinbase
- KFC accepts bitcoin through BitPay
- Overstock accepts bitcoin through Coinbase
- Subway branches (where available) accepts bitcoin as a payment
- Virgin Mobile and Virgin Airlines accepts bitcoin for space travel
- CheapAir accepts bitcoin through Coinbase
- Purse.io allows you to shop on Amazon and pay with bitcoin
- Hotels.com will reward you with micro-amounts of bitcoin for booking through the site
Notably, AT&T became the first major U.S. mobile carrier to let customers pay in bitcoin through a third-party service provider.
There are important distinctions between bitcoin and digital transactions. Knowing the difference between AliPay, Venmo, Apple Pay, Facebook’s Libra, JP Morgan’s JPM Coin – and why bitcoin is not like any of these options is critical to understand. This has been covered in the previous articles in this series, Part 1: Institutions, and Part 2: Economic Uncertainty. Here is a side-by-side comparison that summarizes key differences:
Emerging Payment Options
Paying for daily goods with a mobile wallet, tied to crypto, will become effortless in the years to come. One of the leading startups right now is Flexa’s SPEDN, which is linked to fifteen retailers, such as Whole Foods, Barnes and Noble, Nordstrom, Petco, Ulta Beauty, Lowe’s and Bed, Bath and Beyond.
The app integrates existing point-of-sale with blockchain technologies and simplifies the payment settlement process for the merchant while allowing Ether, Bitcoin, Bitcoin Cash and the Gemini dollar payments. As Gemini’s CEO Tyler Winklevoss stated, “This technology shifts cryptocurrency from investment and speculation toward real usability.”
There will be many startups offering to bridge the gap between crypto’s current lack of flexibility and the broader world of crypto users who want to pay with an alternative form of currency. The barrier to entry is relatively low, requiring a team of software developers, compared to 5G or autonomous vehicles, which require entirely new infrastructure or complex robotic systems.
Thus, the number of startups in this space is likely to swell. Whatever friction exists for crypto payments, technically speaking, will be solved in short order over the next few years.
As stated, larger corporations and the free market are driving the supply forward. To interrupt this process, via the Federal Reserve, the IRS, or control from other central banks, will require direct action against free markets – and, essentially, capitalism. In addition, stopping the advancement of technology around blockchain will severely hinder a free market economy as blockchain transactions reduce intermediary fees, that in turn, lowers debt and improves savings for the financial system and all of its participants.
Blockchain and cryptocurrencies also assist banking with a much more secure, decentralized system. Too many critics misunderstand how development around Bitcoin, Ethereum and blockchain protocols improves the fiat system by removing unnecessary costs. The token, bitcoin, may compete with fiat currencies, but development around the token is essential right now for an economy to run on blockchain in the future (even if the bitcoin blockchain is not the one adopted).
The countries that do adopt blockchain, and some form of cryptocurrency, will be superior technologically speaking, and the United States is very unlikely to halt this progress by attacking Bitcoin – a token and a protocol that is laying the groundwork for economic efficiency.
The more likely response from the federal government will be a centralized, regulated token that competes with bitcoin (while allowing bitcoin to run its course). There is room for both, and to repeat this point, development around bitcoin will cut the path for any centralized tokens. The Federal government cannot hinder development around bitcoin while expecting to have a federal cryptocurrency in the future; this would be counterproductive.
Despite the likelihood of a centralized domestic token, my prediction is that bitcoin’s value will persist due to its global potential, as covered in my previous articles in this series.
Paid subscribers to my Research Services will receive the following additional information:
- Scenarios for when to enter the asset and build a buy and hold strategy.
- Why I timed my analysis to Q2/Q3 2019 (and not 2018 or 2020) – from a fundamental standpoint.
- The one alt-coin that I am watching closely and has potential for a 1000% return along with recommendations timed for the next (and perhaps final) pullback for this alt-coin.
Sign up for Analysis on the Best Tech Stocks
I’m an industry insider who writes free in-depth analysis on public tech companies. In the last 12 months, I predicted Facebook’s Q2 crash, Roku’s meteoric rise, Uber’s IPO flop, Zoom’s IPO success, Google’s revenue miss and more. Be industry-specific. Know more than the broader markets. Sign up now. I look forward to staying connected.
If you are a more serious investor, we have a premium service that offers institutional-level research and entry/exit options. This membership offers a competitive edge in identifying growth opportunities and reducing risk in the tech sector. Learn more here.
More To Explore
Will Bitcoin Make a Good Investment? Phase 2: Economic Uncertainty
In the previous analysis, we discussed one primary reason that bitcoin will make a good long-term investment, as the price is likely to go up and stabilize once institu...
Will Bitcoin Make a Good Investment? Part 1: Institutional Adoption
The largest bitcoin conference in the world took place last month in San Francisco with many early pioneers discussing why bitcoin has made a good investment for them a...
Highlights from Bitcoin Conference 2019
Last week, the world’s largest bitcoin conference took place in San Francisco. Despite bitcoin holding a $200 billion market cap in Q2 2019, cryptocurrency conferences ...
Q1 Earnings Analysis for Etsy, Square, and Palantir
As earnings season winds down, we review earnings reports for popular growth tech stocks Etsy, Square, and Palantir.
Will Facebook Cryptocurrency Have A Long-Term Impact?
Facebook has been clobbered by privacy issues for nearly 16 months now. A pivot into cryptocurrency could help save the social media giants market cap while making good...
MWC 2019: A Dose of Reality on 5G, Those Foldable Phones and Bitcoin Has a Serious Competitor
The GSMA Mobile World Congress (MWC) is the world’s largest exhibition for the mobile industry and combines influential companies from Asia, Europe and North America in...
Podcast: This Week in Startups and I/O Fund on Tech Investing
The I/O Fund believes venture capitalists are some of the world’s best tech growth investors so we were thrilled to join Jason Calacanis on This Week in Startups.
Up-Close on Strategy with Lead Analyst of the I/O Fund
Recently I joined Ed Gotham from CMC markets in the Opto Sessions podcast. I discussed what tech trends will shine in the next five to ten years, how I started I/O Fund, and how we spot the right tech
I/O Fund Discusses Opportunities in China and Crypto
I recently joined the ‘Building Wealth’ podcast with Rajeev Aggarwal. Among several other topics, we spoke about why the I/O Fund thinks having some exposure to Chinese stocks is a good idea, and our
Are FinTech Solutions Safe on Mobile?
We live in a digital world where almost everything we touch is being stored on servers, the cloud or in mobile applications. Technologists push for the adoption of digi...