Arnon Dror | Bitcoin and Blockchain Technology
Arnon Dror said that if you had bet on Bitcoin a decade ago and held onto it despite the skeptics, you would be set for life today. Since Bitcoin started trading for less than $0.01 in 2009, its value has since increased by a million, peaking at around $20,000 per one Bitcoin. Arnon Dror says that Bitcoin’s wild success poses important questions about the nature of investments or what can be considered an asset.
It’s hard to believe that Bitcoin has already turned a decade old since its release into the wild on October 31, 2008. While no one knows who Satoshi Nakomoto is (it’s the name used by Bitcoin’s inventor), the cryptocurrency has without a doubt opened the gates for alternative solutions to finance and even doing business.
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In business, the game-changing success of Bitcoin has less to do with the currency itself and more on the technology behind it. Blockchain at its core is a link of records, called blocks, that contain incorruptible or unalterable data. One of the best ways to understand the value of blockchain technology is to think of it as a shared ledger that everyone has access to. If before only a third party, such as a bank or an appointed regulator has access to the ledger, now everyone is on equal footing.
Arnon Dror says that one question frequently asked by blockchain evangelists is that who’s watching the third party? This is how blockchain came to be understood as a decentralized database where a third party is no longer needed to keep watch over the transactions. Parties who have access to the ledger don’t need to ask the third party’s permission either. In business, this means millions of transactions in an instant.
With a market capitalization of about $100 billion, Bitcoin has captured the imagination of ordinary investors and Wall Street alike. Arnon Dror, however, warns that investors should be prepared for the wild swings in Bitcoin’s price. Stories of people who saw their life’s savings and retirement money being wiped out without a moment’s notice perhaps equal that of overnight millionaires. This is why you should only put in money you’re willing to risk it, says the finance executive.
Arnon Dror, however, sees Bitcoin penetrating the mainstream in more ways. For instance, cryptocurrency investment firm Grayscale Investments managed to raise $330 million this year for Bitcoin Investment Trust, a publicly quoted fund. Last year, the firm only managed to raise $25.4 million which shows continued strong support for Bitcoin. In addition, the Securities and Exchange Commission is open to approving a cryptocurrency exchange-traded fund or ETF for next year. While the cryptocurrency ETF has seen several delays already, its approval by the SEC is a welcome development.
In the meantime, investors may want to turn their attention again to old yet tried and tested investment vehicles like bonds, time deposits, and certificates of deposits for parking their money. To be sure, these investment vehicles have much lower returns compared to Bitcoin, but in the grand scheme of investing, it pays to remember that wealth building is a marathon and not a race.