Almost 61,000 Swiss francs for one Bitcoin – this week the cryptocurrency reached a new all-time high. Since then, Bitcoin has lost some of its value, but the upward trend has been confirmed. Other cryptocurrencies have also continued to increase in value in the long term. Fabian Schär, crypto expert and professor of blockchain technology at the University of Basel, says euphoria is misplaced – but it will definitely remain exciting.
Fabian Schär
Blockchain expert
Open the people box. Close the people box
Fabian Schär is Professor of Distributed Ledger Technology (Blockchain) and Fintech at the Faculty of Economics at the University of Basel. He is also managing director of the Center for Innovative Finance at the University of Basel.
SRF News: Why has Bitcoin reached a new all-time high right now?
Fabian Schär: It’s difficult to pinpoint fixed reasons. But there are some indications – this includes the hype surrounding the ETFs that have been approved and that institutional investors are engaging more with them and investing on a large scale. In addition, enormous professionalization has taken place. Last but not least, the so-called Bitcoin halving is coming up. This always leads to a higher media presence.
Bitcoin halving – artificial scarcity
Open box Close box
A Bitcoin halving takes place approximately every four years, the next time is expected to be in mid-April 2024. Specifically, it will take place when 210,000 blocks have been reached, so an exact date cannot be set. The so-called miners who maintain the databases then only receive half the rate per newly created Bitcoin.
This creates an artificial shortage as the halving reduces the supply of new Bitcoins. Accordingly, the value of Bitcoin could increase again.
The number of Bitcoins is limited to a total of 21 million. Halving slows down the creation of new Bitcoins. The maximum number is expected to be reached in 2140.
You shouldn’t just look at that number too much, but really get to grips with the technology.
How surprising is the price development for you? Bitcoin and other cryptocurrencies recently suffered deep price declines.
For me it’s not terribly surprising. What’s exciting is that the hype when the price goes up is extremely high. If it goes down, Bitcoin will be declared dead. I think it would be important not to get too euphoric when prices are high, but even if they go down again, you shouldn’t demonize everything straight away.
Does the upward trend perhaps also show how accepted Bitcoin is now as an investment? Or does it remain primarily speculation?
I believe that it now has a certain value as a diversification tool. The exciting characteristics that Bitcoin has have also reached the world of financial intermediaries. Nevertheless, I would like to remind you again that you shouldn’t just look at this number too much, but rather really deal with the technology.
Cryptocurrency or cryptoasset?
Open box Close box
Fabian Schär is very cautious when it comes to the term cryptocurrency: “For me, they are cryptoassets because it is primarily about the investment and it does not necessarily have a currency character.”
The individual assets would also differ greatly, especially Bitcoin and Ethereum: “With Ethereum it is about creating a certain infrastructure where many smart contract-based applications can be mapped onto it. With Bitcoin, on the other hand, it’s really primarily about the asset – that is, the Bitcoin.”
What’s particularly exciting is that you can keep it independently, that you don’t have to depend on anyone if you don’t want to, and that it represents a neutral and independent financial instrument.
As a new type of asset class, Bitcoin could certainly become interesting in the long term. But that is still a long way away.
How useful is Bitcoin now in the real world, for example for payments?
It is still not very widespread as a means of payment – despite individual headlines. Currently you don’t get very far with Bitcoin as a means of payment. This is despite the fact that it was originally intended as a form of digital cash. However, as a new type of asset class, it could definitely be interesting in the long term. But there is still a long way to go – Bitcoin still has a very young history and anything can happen.
Bitcoin as an alternative to gold?
Open box Close box
Legende:
REUTERS/Dado Ruvic/Illustration/File Photo
At the same time as Bitcoin’s record price, the gold price has also reached a new all-time high. Is Bitcoin also manifesting itself as an alternative to gold?
Fabian Schär has his doubts. However, it is undisputed that gold and Bitcoin have similar characteristics: “They both exude a certain independence from the financial markets – in the sense that they are not dependent on a single central bank or government.”
But you also have to be careful, says Fabian Schär: “Gold has a history that goes back thousands of years and Bitcoin, even though it has proven itself in recent years and has come back again and again, is of course still extremely young in comparison.”
Cryptocurrencies like Bitcoin still have very fluctuating prices. Will it stay that way for the foreseeable future – or will the prices become more stable the longer?
I expect volatility to remain. There is a fixed amount of 21 million Bitcoins, then it ends and no more are created. And: demand is fluctuating and cyclical. This makes it clear: Bitcoin will not be able to exhibit stability like a classic central bank currency. In the long term, however, neutrality or independence can have a positive effect. And that will show whether Bitcoin can maintain its purchasing power in the long term.
The interview was conducted by Nico Bär.