Bitcoin: All It’s Hyped Up to Be?

Bitcoin Price Prediction Had you spent $27 on Bitcoin when it was created by Satoshi Nakamoto in 2009 your investment would now be worth over $37,000,000.

Widely regarded as the greatest investment vehicle of all time, Bitcoin has seen a meteoric rise during 2017 going from $777 all the way to $17,000.

Creating millionaires out of opportunistic investors and leaving financial institutions open-mouthed, Bitcoin has answered its critics at every milestone this year and some believe this is just the beginning.

The launch of Bitcoin futures on December 10th, which for the first time will allow investors to enter the Bitcoin market through a major regulated US exchange, implies that we are just getting started.

What makes Bitcoin so valuable is that there is a finite amount in existence. There will only ever be a maximum of 21 million Bitcoins and unlike normal fiat currencies you can’t just print more of them whenever you feel like. This is because runs on a proof of work protocol: in order to create it, you have to mine it using computer processing power to solve complex algorithms on the Bitcoin blockchain. Once this is achieved, you are rewarded with Bitcoin as payment for the “work” you have done. Unfortunately the reward you get for mining has decreased drastically almost every year since Bitcoin’s inception, which means that for most people the only viable way to get Bitcoin is buying it on an exchange. At the current price levels is that a risk worth taking?

Many believe Bitcoin is simply a bubble. I spoke to cryptocurrency expert and long term investor Duke Randal who thinks the asset is overvalued, “I would compare this to many supply and demand bubbles over history such as Dutch Tulip Mania and the dot com bubble of the late 90s. Prices are purely speculation based, and when you look at Bitcoin’s functionality as an actual currency it is almost embarrassing.” For those who don’t know, the dot com bubble was a period between 1997-2001 where many internet companies were founded and given outrageously optimistic valuations based purely on speculation that later plummeted 80-90% as the bubble began to collapse in the early 2000s. Some companies such as eBay and Amazon, recovered and now sit far above those valuations but for others it was the end of the line.

Do Boards Need a Technology Audit Committee?

Look Wellsaid Vocalid Aihao Mit Technologyreview What does FedEx, Pfizer, Wachovia, 3Com, Mellon Financial, Shurgard Storage, Sempra Energy and Proctor & Gamble have in common? What board committee exists for only 10% of publicly traded companies but generates 6.5% greater returns for those companies? What is the single largest budget item after salaries and manufacturing equipment?

Technology decisions will outlive the tenure of the management team making those decisions. While the current fast pace of technological change means that corporate technology decisions are frequent and far-reaching, the consequences of the decisions-both good and bad-will stay with the firm for a long time. Usually technology decisions are made unilaterally within the Information Technology (IT) group, over which senior management chose to have no input or oversight. For the Board of a business to perform its duty to exercise business judgment over key decisions, the Board must have a mechanism for reviewing and guiding technology decisions.

A recent example where this sort of oversight would have helped was the Enterprise Resource Planning (ERP) mania of the mid-1990’s. At the time, many companies were investing tens of millions of dollars (and sometimes hundreds of millions) on ERP systems from SAP and Oracle. Often these purchases were justified by executives in Finance, HR, or Operations strongly advocating their purchase as a way of keeping up with their competitors, who were also installing such systems. CIO’s and line executives often did not give enough thought to the problem of how to make a successful transition to these very complex systems. Alignment of corporate resources and management of organizational change brought by these new systems was overlooked, often resulting in a crisis. Many billions of dollars were spent on systems that either should not have been bought at all or were bought before the client companies were prepared.

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