Tom Lee, founder of Fundstrat and Wall Street stock market expert, understands Bitcoin is on the rise for investors – but believes the cryptocurrency is nowhere close to reaching its full potential, recently released a forecast betting that Bitcoin could rise as high as $6,000 per coin by mid-2018.
This would be an increase of about 29% from today’s figures. To support his argument, Lee cites increased awareness of Bitcoin in general, and the enhanced privacy and security this method gives consumers as key reasons he expects it to rise in value. His target estimate for 2022 for Bitcoin is a whopping $25,000.
“We see Bitcoin as gaining from institutional sponsorship, improving transaction platforms and ultimately, greater public adoption,” Lee said.
Why is this Wall Street analyst so bullish about the cryptocurrency? Read on to find out.
What is Bitcoin?
This new currency appeared on the finance scene in 2009, offering ways to make transactions and transfer funds without bank involvement. Early adopters also enjoyed the anonymity and the ability to complete transactions without fees.
While Bitcoin was once the domain of high tech fans, gamers and computer savvy experts, it has now become far more mainstream. You can pay for online services, buy dinner or even get your hair cut and pay with Bitcoin instead of cash or credit.
Improved Privacy
When you spend Bitcoins, your purchases remain anonymous. Since Bitcoins are not tied to any one country or geographical location, international purchases and transfers are easy and not subject to taxation or regulation.
Businesses can benefit from accepting Bitcoin because there are no fees associated with processing; traditional credit card processors charge hefty fees to handle payment.
There is a public record of Bitcoin transactions, but names are not tied to the block chain records or revealed during the process. The lack of regulation and fees make Bitcoins particularly appealing to investors, something experts like Tom Lee are relying on when they make bullish predictions for the crypto currency and expect strong growth in the next 5 years.
How do you get Bitcoins?
You can buy Bitcoins on a marketplace or exchange. Mt. GOx is the largest exchange, but there are others as well. You could be paid for a product or service in Bitcoin by anyone using an app or computer, similar to the way you receive a payment via Paypal — but without the fees and regulation.
If you are tech-savvy, you can also mine bitcoins by solving complex math or computer problems. Bitcoins are created by mining, so if you enjoy puzzles, this could be the easiest way to get started with the rapidly growing crypto currency.
Once you have coins, they live in a digital wallet stored in the cloud or on your device. Coins can be sent from your account to others to pay for goods and services, but are not FDC insured or protected.
There is some risk involved; it is possible to be hacked and have bitcoins stolen. Since they are not regulated, there are no real protections for your wallet beyond a robust approach to security.
New Methods for Investing Coming Soon
If you don’t want to mine or buy Bitcoins, you may have more options soon. The Commodity Futures Trading Commission cleared cryptocurrency trading platform LedgerX in July. Experts like Tom Lee believe that moves like this increase Bitcoin visibility and enhance participation, leading to growth for investors. Even banks may soon get involved.
“One may say this is preposterous to say central banks would own Bitcoin,” Lee said. “We believe that central banks would view cryptocurrencies differently if Bitcoin’s aggregate value exceeded $500 billion.”
“Short-term traders should be prepared for another volatile consolidation period heading into late August given the XBT is nearing our next resistance levels with daily/short-term momentum becoming overbought.”
Learning more about and tracking the performance of Bitcoin can help you determine if this cryptocurrency is a worthwhile investment for your own portfolio. If Tom Lee is correct, there will be plenty of opportunity for growth for Bitcoin in the coming years.
Regards,
Ethan Warrick
Editor
Wealth Authority
