LONDON 2016 could prove to be the year that the price of bitcoin surges again.Not because of any dark-web drug-dealing or Russian ponzi scheme, but for an altogether less sensational reason - slower growth in the money supply.Bitcoin is a web-based "cryptocurrency" used to move money around quickly and anonymously with no need for a central authority.But despite being championed by some as the digital money of the future, it is often dismissed as a currency that is too volatile to invest in.The reason 2016 looks set to be different is that bitcoin's price is likely to be driven in large part by similar factors to a traditional fiat currency, following the age-old principles of supply and demand.Instead of being controlled by a central bank, bitcoin relies on so-called "mining" computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes.In return, the first to solve the puzzle and thereby clear the transactions is currently rewarded with 25 new bitcoins, worth around $11,000 BTC=BTSP.

But when it was invented in 2008 by the mysterious "Satoshi Nakamoto", who has yet to be identified, the bitcoin program was designed so that the reward would be halved roughly every four years, in order to keep a lid on inflation.The next time that is due to happen is July 2016.Bitcoin was also designed to emulate a commodity by having a finite supply of 21 million bitcoins, which will be reached in around 125 years, up from around 15 million today.Hence, also, the use of the term "mining".Daniel Masters, co-founder of Jersey-based Global Advisors' multi-million dollar bitcoin hedge fund, started his career as an oil trader at Shell in the mid-1980s and spent 30 years trading commodities before crossing over to bitcoin.Now he reckons the price of bitcoin could test its 2013 highs of above $1,100 next year and then pick up speed to rise to $4,400 by the end of 2017.That would be due to a number of factors, Masters said, including an increased acceptance of payments in bitcoin by big companies and authorities, rapidly growing interest and investment in the "blockchain" technology that underpins bitcoin transactions, and also more demand from China as its currency weakens and the economy slows.

But taken in isolation, the halving of the mining reward will increase the price of bitcoin by around 50 percent from where it is now, Masters reckons.That is despite the fact that the halving of the reward has always been inevitable - a factor that would already have been accounted for in pretty much every other market.bitcoin goes bust"If OPEC (Organization of the Petroleum Exporting Countries)came out tomorrow and said, 'in six months' time we're going to halve oil production', the oil price would instantaneously react.bitcoin mining on old pcBut the bitcoin market is still in its infancy, and I don't think that factor is discounted into the price fully," he said.Bitcoin's price has already almost doubled in the last three months, putting it on track for its best quarter in two years.ethereum payout

It hit $500 last month for the first time since August last year, with Chinese demand for a pyramid scheme set up by a Russian fraudster cited as a reason for the price surge.bitcoin api perlBut Bobby Lee, the chief executive of one of the leading bitcoin exchanges in China, BTCC, reckons there is scope for the cryptocurrency to go much further.comprar hardware bitcoinHe thinks the price could increase by as much as eight times in the time up to the reward halving, taking it as high as $3,500 by next summer.bitcoin mining rig kaufen"Today the worth of bitcoin is $1 per capita in the world (population)," Lee said, referring to the value of all the bitcoins in circulation, around $6.5 billion.ethereum initial offering

"For such an innovative, decentralized digital asset, I say 'boy, are we undervaluing it'.But it takes a while for people to realize that."Themining reward has already been halved once before, in November 2012, from 50 to 25 bitcoins.bitcoin calgaryThe stakes were much lower then, with one bitcoin worth around $12, but nevertheless the price increased by about 150 percent in the preceding seven months - roughly the time left before the next halving.bitcoin pci express card"It (the halving) dampens supply so, all other things being equal, that puts upwards pressure on price," said Jeremy Millar, partner at London-based financial technology specialists Magister Advisors, who expects demand to continue to increase."Noone can argue with that fundamental economic principle."(Editing by Greg Mahlich)One of the things I try to do here at Liberty Blitzkrieg is identify and comment upon major macro trends before they become apparent to the public at large.

Sometimes these trends are positive, while other times they are decisively negative.Since I started writing publicly, I’d say the emergence and success of Bitcoin has been the most positive macro development I’ve observed.While I certainly wasn’t an “early adopter” of the technology, I did identify it and highlight its significance well before most people had ever heard of it.My first post on the topic was way back in August 2012, and since most of you weren’t following me back then, here it is for your enjoyment: A few weeks later, I received my first bitcoin donations from generous readers and the rest is history.The price was $10.A couple of years later, I came across serial entrepreneur Vinny Lingham far before he became known as the “The Bitcoin Oracle.” He really caught my attention with a 2014 post describing why the price was acting so weak following its tremendous run the prior year.I found his thought process extremely compelling and I highlighted his thesis in the post: I continued to follow his Bitcoin writings and have published them consistently ever since.Which brings me to today’s post.

A couple of days ago, Vinny updated his thoughts for 2017 and many people are making a big fuss about his commentary that he expects bitcoin to reach $3,000+ per BTC next year.I find this interesting, because this is not a new call for him.He said the exact same thing back in May, which represented a much bolder call since the price was trading below $500 (it’s at $950 today).That original forecast was covered in the post, In any event, Vinny is back with his latest thoughts.Below are some key excerpts, and you can read the entire original .As much as I’m flattered by the attention and the emergence of nicknames such “Bitcoin Oracle” (Thanks to TwoBitIdiot for coining it!).I do feel the need to make a point of two things, in particular.Firstly, I don’t have a crystal ball, and everything I say has a certain percentage chance of either occurring or not occurring — we live in a probabilistic world, so when I make a call, it’s because I think the outcome is highly likely, but that does not always mean it’s certain.

Secondly, I’m a macro guy — big picture focus.I don’t look at the trading charts every day (I just don’t have the time!)and even though I don’t actively trade anymore, I do understand things like leverage, slippage and liquidity in markets quite well.I don’t do technical analysis as macro factors will shift the playing field and disrupt the charts so in my opinion, they are often best used for looking back, and not forward.Most of my calls are based upon fundamentals that I observed from my working knowledge of capital flows, supply & demand, and other fundamental perspectives on economics, psychology, money, business, game theory and a host of other subjects — including life experiences and the differences between living in South Africa and the USA (capital controls, hyperinflation leading to Zimbabwe’s currency collapse, high interest rate environments, etc).If you have read my prior posts, you will find this to be the case when I lay out fundamentals for why I believe things in the Bitcoin world will play out the way I forecast or suggest.

This is not wizardry or crystal ball stuff; it’s just observations that I have made from analyzing lots of disparate data and information derived from multiple sources and then trying to figure it all out.And, sometimes I will be wrong.The late 2016 price surge: Bitcoin has performed particularly well over the past month, for 2 primary reasons.The first is largely due to the macro economic factors — demonetization in places like India & Venezuela, geopolitical concerns over the Trump election and its impact worldwide, and most importantly, but- most misunderstood and not often cited- the recent fed rate hike which puts pressure on emerging market currencies, strengthens the dollar and in turn creates a surge in the forex/BTC trading price.This in turn creates additional foreign buying and demand for Bitcoin as a forex hedge, particularly outside the US, because the price of Bitcoin in that country is rising quickly.The second factor is that after the $800 price mark was breached, there was a hollow supply interval between $800 — $900 (i.e.

not a lot of sellers, for various reasons which would take too long to explain in this post).This triggered an effective short squeeze and pushed the price above $900 very quickly.We will most likely find a potentially short period of consolidation around low $900’s, before we start testing the 4 digit barrier, potentially with one or two mini spikes to the mid $900’s and then a sell off back into the upper $800’s/low $900’s as the market finds its feet after skipping a beat through the $800’s.There is also the year end impact of profit taking around December 31, but I don’t expect it to be outside these ranges.Dollar interest rate hikes driving Bitcoin price up: As I alluded to in the previous point, the fed interest rates impact Bitcoin to a degree that most people will not grasp.This is a topic for a much longer post, so I will need to be brief here.Essentially, the higher the rates go, the higher the demand for Bitcoin will be.The divergence that you see is happening because Gold has been heavily favored by Gold bugs for historical reasons (in times of crises, etc) as the go-to commodity based store of value if an economic collapse happens, etc — which was often followed by a period of low interest rates and then inflation.

Inflation is just not happening in the US, due to Quantitative Easing.As a result, Gold is still overvalued, especially if the fed now continues to raise rates, which I expect will occur.Bitcoin will rise with an interest rate hike because unlike Gold, there is further upside in the capital value of Bitcoin, so the need for some type of yield to offset it is greatly reduced.When the fed raises rates, emerging market economies have their currency devalued, which raises the effective price of Bitcoin for people in those markets, creating more equity value in their Bitcoins and driving up demand for more.This is because the price to mine a Bitcoin is largely uniform (electricity price, aside) in every country in the world and it’s a commodity that trades freely across global markets — labor input costs are not germane to Bitcoin, unlike Gold.If your currency devalues, it just costs you more to mine a Bitcoin or buy a Bitcoin.The market doesn’t care how your currency is performing.

Some would argue that Bitcoins don’t provide yield similar to gold and therefore should be subject to the same price pressures that rising interest rates impact gold, but the reality is that the current market capitalization of Bitcoin is fractional to gold and so, for the time being, the expected capital appreciation of Bitcoin heavily discounts the need for a yield curve right now.This may change in the future. for more detailed info here).When rates rise, entities (corporates or governments) have to then make interest rate payments in USD and they then have to sell local currency in order to do that, which in turn weakens the local currencies even more — effectively trying to close out a dollar short position on a regular basis.This is over and above any unwinding of carry trade positions that are no longer profitable with higher cost dollars — a vicious cycle ensues.Bottom line is that rate hikes devalue foreign currencies and strengthen the dollar.This is particularly visible in countries where entities with local currency earnings have been financing dollar denominated debts without sufficient dollar based income.

Bitcoin is seen to be gaining in local currency price trading pairs, which makes it far more desirable and in effect increases demand, because of upward price momentum in those currencies which creates more demand for Bitcoin.Without a doubt, Bitcoin will rise further next year.I expect to be within the $3k range by the end of next year, as I have previously forecast. bubble — so I don’t expect another one like this again, but I could be wrong.Similarly, the tech world eventually crushed those “bubble” highs once the technology and businesses matured and built towards higher and even more sustainable highs, post 2000.Since the previous high for Bitcoin, it has been over 3 years.I will write a follow up post which expands on some of the topics above in greater detail, but for now, I will summarize my expectations for next year.What to expect in 2017 for Bitcoin: Reasonably low volatility (for Bitcoin), maybe a couple of dips here and there, but a steady pace of growth.More broader industry use cases and applications for Bitcoin.

My company, Civic, is building out a Blockchain based identity platform and I’m very excited about the prospects of using a public ledger for global identity management (and no, we don’t store your personal info on the blockchain!).Government sponsorship or endorsement of Bitcoin related companies and more likely, government led buying of Bitcoins or investment into Bitcoin mining companies or similar.Potential government crackdowns on Bitcoin in certain countries, due to capital flight or loss of exchange controls.This will drive up the Bitcoin price in the black markets in those economies.I do expect a 2 -3x price growth overall in 2017 for the USD/BTC pair.This may result in Bitcoin prices in other currencies being up 4 -7x, but I think it’s fair to say that USD/BTC pairing is what we should use as the benchmark.Segwit will be adopted to handle scaling.What NOT to expect in 2017 for Bitcoin: Parabolic growth (not 20x) (i.e.Bitcoin $10k is probably not going to happen in 2017) A hard fork.