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February 05, 2018, 03:12:41 PM |
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James Song, CEO, ExsulCoin Bitcoin will be replaced by another, more useful technology over the next five years. Before that happens, in the shorter term, banks will get increasingly involved with bitcoin, and create financial products around them. One of these products will be some type of insurance product that protects traders against losses. Bitcoins price will keep going up, maybe to $1,000,000, and banks will make a lot of money selling this insurance product, since they can continue collecting premiums on an asset that seemingly wont stop rising.
Theyll bundle these insurance products into other derivatives and then make money selling those, too. And then, one day, when no one expects it, bitcoins price will rise a bit too high, and no one will want to buy it anymore. No one has ever seen a cryptocurrency panic, and this will be the first. People will lose everything: entire retirement accounts will vanish overnight; bitcoin billionaires will become bitcoin street beggars.
Banks that sold insurance products against bitcoin losses will be forced to declare bankruptcy, but will not go bankrupt. Instead, theyll off-load the bad debt into a structured product, then give all the people they owe money to shares of that product. Banks will survive. People will be angry. A state of emergency will be declared. Regulations will be passed and bitcoin trading will be heavily constrained. Thats when people will move onto a another, more useful blockchain technology.
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