The rise of bitcoin in 2017, should businesses accept it for transactions?

A man in suit holding a coin

While most people haven’t heard about cryptocurrencies, you’ve probably heard someone mention Bitcoin. Bitcoin recently rose to new heights with another record high of $8,200. An amazing appreciation of 700% since inception in 2009.

The rise of bitcoin in 2017

Earlier this year, the Securities and Exchange Commission rejected a bid from Cameron and Tyler Winklevoss to launch a bitcoin-based exchange-traded fund. In the wake of the rejection, prices dropped below $1,000. The SEC said bitcoin and other cryptocurrencies are unregulated; hence, it didn’t meet the required standard. Fast forward to April and in a surprise move, the SEC reviewed its’ decision. The price of bitcoin railed 163% by August.

At the start of the year, one bitcoin was valued at $1,000, it rose to $1,500, $3,000 and by August, it was valued at $4,000. Repeated highs are attributed to a bullish market as financial giants, Goldman Sachs and other Wall Street’s top guns are rumoured to be setting up Bitcoin trading desks. The huge potential for returns is attracting investors from around the world, another factor that is expected to fuel its’ price heading into 2018.

The currency was inspired by the 2008 financial crisis as people sought a decentralized means of doing business without involving banks. Is bitcoin a shiny new object or the future of technology? Businesses are yet to understand the full impact bitcoin could have on their operations and the economy.

As at October 2017, Bitcoin’s market capitalization was $96.7 billion, larger than Morgan Stanley and Goldman Sachs. An impressive statistics by any standard. The number of people using bitcoin continues to grow as the price rises with current estimate from Coinbase and ARK Invest showing that over 10 million people have a significant amount of Bitcoin in their wallet.

What should new investors know about bitcoin?

Bitcoin is a digital currency that cuts out banks and other middlemen. A person going under the alias of Satoshi Nakamoto released it as an open source in 2009. It has since grown into a credible, legitimate currency payment option especially in countries like India, Singapore, Russia, Japan and China who have moved to create their own version of the digital currency.

The number of merchants accepting bitcoin has increased. Large brands like, Whole Foods, Reddit,, Virgin Galactic and Subway among other merchants.

To record all transactions, Bitcoin uses blockchain technology, a publicly distributed ledger for financial transactions. A new block pops up when a transaction is completed and when the block is full, it moves to the end of the sequential chain.

Many industry experts, who think Bitcoin is too volatile, admit there is potential for the application of blockchain technology. They believe it will revolutionize the way future transactions are conducted. With features like transparency, high-level security and streamlining, blockchain will increasingly reduce the number of parties that facilitate a transaction

Problems with Bitcoin

A stack of coins

Industry leaders like Warren Buffet and CEO of JP Morgan Jamie Dimon have stated that Bitcoin is useless, worthless and a fraud. Experts have raised concerns that potential investors should note.

Top of the list is concerns about the lack of regulation by any governmental body or established institution. Some have likened Bitcoin to monopoly money because its’ doesn’t have tangible value like gold nor is a fiat currency. The worth of Bitcoin is what people place on it.

Another concern is that it’s not traded on Wall Street, hence it can’t be traded by a brokerage. Investors have to set up a wallet where they can receive and send Bitcoin, using a wallet address. The process causes wild swings and volatility because its’ less liquid than conventional equities. The prices was highly unstable between February and June, fell to $2,000 in July and rose to over $3,400 in early August. Movements like this are unheard of with other currencies.

Forrester analyst Martha Bennett suggests that cryptocurrencies haven’t been around long enough for any real stability. The volatility makes it dangerous to price items with Bitcoin, which could have a dramatic effect on the sale of goods priced primarily with bitcoin.

The volatility also affects exchange for cash. When you initiate transaction, if the price was $4,000 and at the time of exchange, and it drops to $3,500 at the time of payment, that’s’ what the exchange platform pays. Even exchanges with online bitcoin portals take time and involve high fees.

Should businesses accept bitcoin?

While questions have been asked about the sustainability of bitcoin, Lloyd Blankfein CEO of Goldman Sachs said people were also worried when paper money overthrew gold. In fact, analysts from Goldman correctly predicted the new price. More people are expected to join the Bitcoin train in 2018 and as long as that happens businesses will have to adapt to the change by offering payment options.

The popular mobile payment arm of Twitter, Square, recently announced a trial run of bitcoin purchase, due to numerous requests from customers asking to use Cash app to buy bitcoin. Another company Chicago Mercantile Exchange earlier stated it would list future bitcoin contracts as clients indicated interest in the bitcoin market.

As more people see the wealth potential in bitcoin, the number of people using Bitcoin and the related price will continue to rise.

Bitcoin symbol

Where is Bitcoin headed in 2018?

For many years, analysts and traders alike have suggested that Bitcoin had the potential to surpass $100,000 by the end of 2018, which would offer a multi-trillion dollar market cap, the greatest disruption the global financial world has ever seen.

Based on the exponential growth regarding adoption, user base, trading volumes, developer activities and market cap, the price target of $100,000 is achievable, especially if more retail investors and leading industries continue to endorse and adopt bitcoin.

Two of largest Bitcoin service providers and largest exchange Coinbase and Gemini are developing trading portals for large-scale investors. The goal is to provide a robust, more efficient channel with enough liquidity for retail investors.


The focus has shifted from the legitimacy of bitcoin to the rapid pace new entrants are raising funds. Bitcoin and other cryptocurrencies cannot be ignored anymore. However, due to its’ volatile nature, we advise new investors to tread with caution and invest only what they can afford to lose.

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