How The Bitcoin Revolution Will Affect Entrepreneurs
It’s been dubbed digital gold for Millennials and anybody else with a sense for good investments. Virtual currencies like Bitcoin are revolutionizing how we make transactions and interact with our global financial system. These unconventional and futuristic currencies are changing our financial world in ways we are just now beginning to grasp.
Entrepreneur Troy Osinoff thrives on the unconventional, and he has long seen the potential that Bitcoin has on how we do business. Osinoff got his start making websites for local businesses at the age of 10, and continued to build his career creating various startups, such as MakeAGIF.com (acquired). From there, Osinoff has written a book (sold to Fox in late 2017), funded various companies and advised a variety of startups.
His large network of websites and social channels reaches millions of users every month. He follows the Bitcoin and digital currency market closely, sometimes tweeting snippets of advice, such as when dips in the market make it a good time to buy.
Osinoff recently sat down with me to explain why savvy entrepreneurs won’t let the Bitcoin revolution pass them by. His insights crystallize the importance of digital, decentralized currencies like Bitcoin, explaining how they fit into the larger trend of globalized decentralization and how you can better navigate these digital currencies.
Deep Patel: Can you explain Bitcoin, altcoins and blockchain in simple terms for readers?
Troy Osinoff: Bitcoin is essentially a type of currency that is purely digital. It’s decentralized, meaning there is no central authority that regulates a bitcoin’s worth or how many bitcoins exist. Bitcoin’s price is dictated by the market, and the reproduction of bitcoins is built into its programming.
Altcoins is a term used for any coins that are not Bitcoin. A few of the most popular are Ethereum, Litecoin and Ripple. While these coins may have some similarities (mostly their blockchain structure — we’ll get into that in a bit), they largely have different purposes.
Cryptocurrencies such as Bitcoin and other altcoins are built on a “blockchain” structure. This means that their histories, or ledgers, are based on blocks of verified transactions. These transactions are verified by “miners,” who are tasked with solving a complicated math problem to validate the accuracy of a transaction.
Patel: How do you think Bitcoin and blockchain fit into the larger trend of decentralization?
Osinoff: Bitcoin and blockchain are becoming very popular during a time where many industries are becoming increasingly globalized and decentralized. This isn’t purely coincidental — it’s just how markets are evolving.
A decentralized peer-to-peer payment system such as Bitcoin has the potential to transform the world’s economy, and as more people start to use it, it begins to have significantly more power.
Patel: How can Bitcoin fit into fintech and offer opportunities for disruption?
Osinoff: The financial world has come a long way in the past hundred years, and the majority of that growth has happened in the past decade or two. Bitcoin could be viewed as an evolution of the current financial system, and as more blockchain- and Bitcoin-oriented fintech startups come into existence, Bitcoin will be able to make a much larger impact.
Patel: How can people forecast the pricing of Bitcoin and predict spikes and collapses?
Osinoff: Well, they can’t really. Spikes and collapses are largely either (a) a market reaction to new information or (b) the entrance of another big player into the market.
There are certain events that have proven to reveal some of Bitcoin’s sensitivities. For example, when the SEC denied the approval of a bitcoin-based ETP (exchange-traded product), Bitcoin’s price fell 18 percent. Since Bitcoin is largely in a legal gray area, almost any mention of Bitcoin in the United States political system regarding cryptocurrencies as a whole tend to have some impact on Bitcoin’s price.
Bitcoin is currently hovering around a $41 billion market cap. To see a big player make a substantial impact, they would essentially have to trade hundreds of millions or billions to do so. Other cryptos with smaller market caps see huge variations in price. However, if traders see a sudden unexpected dip caused by a big player, they might be inclined to sell their Bitcoins as well. The sudden influx of sell orders attracts more sell orders, and the snowball effect can cause a short-term pullback.
An interesting thing to note is that Bitcoin’s supply is capped at 21 million bitcoins. As more and more people become interested in buying Bitcoin, and since there isn’t a central agency to push out new bitcoins based on market demand, the price is seemingly uncapped. Additionally, people are able to buy small fractions of a Bitcoin and that makes entry into the crypto market very easy for virtually anyone.