With bitcoin encroaching on a market cap of USD 200 billion and Ethereum hovering at USD 45 billion, it's not too farfetched to suspect a bubble is forming in cryptocurrencies, particularly given the ballooning of top cryptocurrency prices this year alone. But one fintech executive says while it's okay to call the altcoins, or alternative digital coins to bitcoin, a bubble, leave bitcoin out of it. Ben Davies, co-founder of Glint Pay, said that bitcoin, based on value, is not a bubble, according to an interview with CNBC. He didn't leave upcoming ICOs out of his synopsis.
According to Davies, while bitcoin has all the signs of the makings of a bubble, it's not one. Instead, he points to the lesser known cryptocurrencies known as altcoins, which begin trading in the market following upcoming ICOs, as more closely resembling the tulip bubble of the 17th century that cryptocurrencies have so often been compared with. While bitcoin is a store of value, other coins are "flooding the market with perishable supplies of worthless value," Davies said.
He went on to compare altcoins with the mosaic virus that breaks up the colors in the flowers, pointing to upcoming ICOs as a means to "bastardize the original blockchain," as per CNBC.
Gold vs. Bitcoin
If you look a little deeper at Davies, you can understand the origin of his intolerance. Glint, his company, facilitates electronic payments in gold. They dub themselves "the global currency." In short, cryptocurrencies pose competition to their market. Consider one of the most famous altcoins, Ripple and the XRP technology. Ripple is the No. 5 cryptocurrency and its blockchain-based XRP technology platform is disrupting the payments industry with "frictionless" payments. Gold investments, meanwhile, are hovering at 2015 lows for first-time buyers.
While Davies didn't criticize bitcoin, referring to it as an "exchange of value afforded by the internet," he doesn't sing the praises of the leading cryptocurrency, either. For instance, given the underpinning of the web, bitcoin doesn't function as a currency in the way that precious metal gold does, he suggests.