“The Future Of Money”

US House Of Representatives

The United States will begin official hearings on cryptocurrency on July 18 2018, on a live stream for the general public to listen on the hearings. The title of this hearing is “The Future of Money: Digital Currency’, somewhat acknowledging that bitcoin and cryptocurrency at least has the potential of being the ‘new cash’ if not the only ‘cash’ of the future. As technology develops, having digital cash is the next natural course.

The exact list of people attending hasn’t been released, but it’s expected to be presided over by the legislators and cyprtocurreny experts. When I hear cryptocurrency experts though, there’s a few worries that come to mind.
The first is that ‘most’ if not all cryptocurrency ‘experts’ tend to completely negate the security portion of digital currency, upselling completely unsafe technology. Which is a legitimate concern surround cyprtocurrency. It’s not fully anonymous like people think, Bitcoin is traceable for example. Public ledgers, permissionless public blockchain, and no central authority within the community to protect the currency itself, are all concerns. Ripple does this fairly well, but still lacks considering their bank affiliations and their motivation to dump XRP (which is unlikely but still worrying).

This hearing will look into the security concerns related to cryptocurrency and curbing issues like money laundering, but experts would have to present a solid case, to show that it’s not different than laundering fiat or gold bars for that matter.

The US congress had released an economic report in March of this year that highlighted the benefits of cryptocurrency and why using it would be good for the economy. Which is a surprising change of mood considering how the Federal Reserve has been on behaving towards it. Perhaps fear that the debt system that they created for over a century is going to break down.

What do you think? Will this hearingĀ  finally give Bitcoin and cryptocurrency the boost it needs after 6 months of FUD?

Cheers!
A.Yasir

Is China Still A Hot Economy?

In the past 10 years I’ve spent a lot of time in China doing business. It depends how you quantify things but I can speak anecdotally and from experience.

China’s GDP growth is no longer double digit

China’s GDP has dropped from the double digit miracle of 10.1% in 2010 to 6.1% in 2016. In terms of numbers there is no doubt China is slowing down but still 6% growth is nothing to complain about. Why so? Because the miracle that is between 10-15 years behind China in Southeast Asia for example is showing similar growth.
Malaysia in 2016 was 4.2% which is a fair drop compared to 2010’s 7.5%. Indonesia follows a similar trend with 2016 being 5.0% and 2010 being 6.4%. We can see a general trend in Asia especially that China is following with moderating GDP but the hype would have you believe otherwise. Don’t get me wrong Southeast is undoubtedly poised for huge growth, it’s just that the hype would have you believe there is double digit growth that hasn’t arrived just yet.

Changes Have Happened
Of course this is no surprise, the Chinese government itself planned for this and stated that double digit GDP is not sustainable into the future. China’s stated goal has essentially been to transform themselves from a labor based economy to a knowledge based economy with internal consumption largely sustaining this. To the credit of China I think they’ve largely achieved this. The evidence is everywhere with constantly rising wages, Chinese citizens are becoming more affluent, buying more expensive items and high end goods have flooded the Mainland and they are intended for the locals. This presents a huge opportunity for companies who have such items on offer.

Missing from the above picture are things I’ve heard from friends and colleagues. A lot of manufacturing companies have packed up shop due to rising costs including labor and moved to Southeast Asian locations. In turn there are less jobs for expatriates than in previous times and with rising living costs in China it has been less attractive to some business sectors and expatriates alike. With less production from the labor force in China, it’s only inevitable that the GDP has moderated.

It’s not all bad
A lot of people have said that some companies entered the Chinese market because it was so lucrative and with less competition. Today that’s no longer true as China’s economy has matured and the country itself has been modernizing and changing at break-neck pace. The one unintended impact is that this also created an environment of uncertainty for some businesses and sectors.

However, it’s not all bad depending on who you ask. China’s ecommerce market is thriving, in fact part of the reason why some companies are no longer there is because just like the West (but even moreso in China) the digital economy and internet have literally transformed and revolutionized the country. What worked yesterday is no longer valid or effective today and this is a general statement for how things are done in China (things move fast!).

Stats in China showed the ecommerce grew by 26.2% in 2016 for a whopping 5.16Trillion RMB/CNY! In fact ecommerce in China is said to represent 15% of ALL retail sales in China and of course these numbers are only expected to increase.

So is China still hot?
It depends from who’s perspective, internal consumption is rising, so are wages, GDP is still fairly high and eCommerce continues to be a huge factor in China. If someone wanted to get into eCommerce in China or offer goods to the growing middle and affluent class in China I would say it’s still hot. As always it is best to diversify and not rely on a single economy.