“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 hearing  finally give Bitcoin and cryptocurrency the boost it needs after 6 months of FUD?

Cheers!
A.Yasir

Ripple Wants Government Regulation of Cryptocurrency

I have always believed regulation was inevitable and this is actually one of the reasons I invested in Ripple.  It’s no surprise that they are calling for regulation as they benefit the most.  As worried about them as I am (saving for another article) this is an excellent hedge against this inevitability.  Ripple stands to profit from this as it already has very good relationships with big finance and governments.  Any regulation is very likely to benefit Ripple the most.

Ripple’s, Ryan Zagone, ironically titled, “head of regulatory relations” has called on the UK to adopt 3-regulatory moves and has suggested they take a cue from Japan.  This is both good and bad, regulation, if fair and easy to follow can remove uncertainty and strengthen the countries that do it right.  I think Japan is a good example of regulation that has gone right and helped cryptocurrency flourish.

Zagone has called on the three issues to be regulated “namely consumer protection, financial stability and anti-money laundering “.  Consumer protection is a given and I wonder why no one has also said “insurance coverage” as this would take most of the risk out of holding cryptocurrency and the risk of theft and hacks.  When it comes to “financial stability” it depends on what he means and what the UK government would take it to mean?  I would take it that this would be the part that would help out Ripple and possibly stunt the growth of competitors to Ripple.  When it comes to anti-money laundering this is a given but again, how do you do it without harming or offending law abiding citizens?  Or will these laws and regulations be a pretext for both Ripple and Big Banking to squash the abilities of everyone else?

The UK Central Bank’s, Mark Carney has said the following about cryptocurrency.

  • “The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities,” Carney said in a speech on Friday.
  • “A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system,” Carney said.
  • Carney also slammed the ability for cryptocurrencies to fulfil the role of money, saying they are “failing” as a medium of exchange and are “proving poor short-term stores of value.”
  • “This extreme volatility reflects in part that cryptocurrencies have neither intrinsic value nor any external backing. Their worth rests on beliefs regarding their future supply and demand —ultimately, whether they will be successful as money.”
  • “At present, in my view, crypto-assets do not appear to pose material risks to financial stability,” Carney said.

Well, Mr. Carney was as honest as he could be, from the banking sphere and without losing his job.  I agree that there is almost nothing backing most cryptocurrencies, aside from mining investment.  However, this is about the same, if not better than fiat which is printed without any backing of assets since the gold standard has long been abandoned.  But let’s read between the lines, he wants regulation and he wants cryptocurrency held to the same standards as traditional finance, but at the same time slams it as being a poor store of value (like Soros who now says he’s investing).  Regulation will be tricky, because you are then giving all cryptcurrency legitimacy as currency by regulating it as such or even to traditional financial standards.

Everyone has their own interest in all of this but it will be interesting to see how this plays out.  The game is different now and governments cannot easily seize crypto assets, nor can they shutdown major players who can move away from their jurisdiction with the click of a button.  If smart people are in charge of regulation they will do it right, but if bankers alone are involved, and continued to feel threatened, I predict carnage, and that it will ultimately harm or even topple our current financial system.

Let’s hope things go smooth and that regulators are not influenced too much more when it comes down to it.

 

Swiss Researchers Forecast Sideways Trading and Downward Pressure on Bitcoin for 2018

They have based it on Metcalfe’s law which says at this point that Bitcoin could lose another 27%.  The group also cites the part I agree with, in that so far cryptocurrency prices are mainly driven by Bitcoin which means Altcoins (other than Bitcoin) have risen and fallen in direct correlation.

Where I am not sure if I agree or disagree is their theory that a lot of this is driven by fear in the news.  While I am sure it is, if the fear is unfounded why should bad news reflect on the long-term valuation?

A sensible market would be wise to react to say the hacks that have happened to Ethereum or the fact that illegal content has been inserted into the Bitcoin Blockchain.  That is bad news that has relevance since these issues potentially threaten the integrity of the entire blockchain.

While we’re on the topic of Metcalfe’s law, since cryptocurrency is a completely new and largely irrational market can we trust this is a valid predictor?  I am not aware that any other traditional models have successfully called any of the major events in cryptocurrency.

I do agree it was time for a significant correction but the same has happened in commodities and stocks before, yet the stock markets keep moving (albeit with a lot of money printing and manipulation-is that what regulators mean by regulation for cryptocurrency? :) ).

Only time will tell where things head but I do think that currencies that are efficient, secure and easy to use will stand the test of time (which admittedly are very few and I cannot think of a single one that solves all of the issues just yet).

Bitcoin Down 53%? Time to panic or time to be happy?

We’ve got to put this all into perspective when people come panicking and asking if you’ve sold all of your Bitcoin.  Just hold, the chart isn’t a lot different than a lot of stocks or commodities.  Let’s speak in terms of the chart since May of 2016.

 

BitcoinMay-2016-toApril-01-2018

Let’s first look back to May 2016 where it was worth about $423 USD.  Is today’s $6974.84 USD so bad?

How about April 20, 2017 whereit was worth $1216 is that so bad compared to today?

The time that makes people nervous is when Bitcoin went on a bullrun around November 1st, 2017 and was worth around $6700 USD to an all time high of around $19500 on December 16th.  I would expect like with any stock that there will be a digestion period or a pullback.

Am I worried yet?  No, unless Bitcoin drops below a year ago’s $1000 why would anyone worry?

Bitcoin on top of that now owns about 50% of the market with this drop so it has shown resiliency and leadership.

It’s not time to panic, it is time to hold steady and wait for the next bull run.  At the end of the day government policy can’t stop Bitcoin.  There will always be a country where it is legal and exchangeable.  If a blanket ban happens people will start trading directly with Bitcoin for other goods.  There’s no way people who have invested thousands of dollars in hardware and power will be throwing these coins away or walking away from them.

Binance Moves HQ to a Welcoming Country of Malta

Recently, a famous cryptocurrency exchange, Binance got into issues in Japan although it is based in Hong Kong.  Malta is a Southern European island country which is essentially located between Italy and Tunisia. It moved its HQ to Malta to an apparently very welcoming Prime Minister who said the following on Twitter:

. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies

Although this is very encouraging it remains to be seen how much they can weather storm from external pressures.  Malta is not a strong or powerful country so if a foreign country or powerful bankers threatened Malta to comply with their wishes against cryptocurrency could they really refuse?

The announcement from Malta is good but it will take a stable and powerful country to do the same for cryptocurrency people and business to migrate there.  It may provide temporary protection or respite but what is truly needed is for a place like Hong Kong or Singapore to step up and do something similar.

At this point I think Venezuela may be the leader in this regard but the major risk with Venezuela is the political, economic and social stability.  If they can resolve those issues Venezuela could be like the Hong Kong or Singapore of Latin America in no time.

US Cryptocurrency and ICO Regulations Push Business Overseas

First of all bravo for Coinbase, with a lot at stake itself, for getting this issue right in the following quote:

There is so much uncertainty about the definition of a security and the scope of regulatory control that the market is being chilled. This is bad for everyone because the technology won’t stop — it will simply move overseas and we will miss out on the opportunity to cultivate the benefits in the U.S.

Much like I’ve been saying is that governments who are overly aggressive, ambiguous and don’t create a fair playing field for cryptocurrency and related companies will be sidelined.  Cryptocurrency cannot be contained by borders anymore than the web could be.  Naturally, I do agree certain practical laws and regulations should apply but the laws should be clear and easy to follow.  If companies are essentially being threatened, raided and faced with uncertainty it hurts both the company and investors.  Ultimately as I’ve said before it will drive these huge sums of money away to countries that treat cryptocurrency users, traders and companies well.

There are so many conflicting statements from governments around the world and multiple bodies in the US.  It sometimes seems as if government officials and bankers who have a lot of input in these matters diverge on the matter.  This is OK but it should not be reflected by creating an atmosphere of fear and confusion whether by design or by fluke.

We all see the market has been impacted significantly with nothing but negative press for cryptocurrency but I believe it will resolve on the upside as investors realize it isn’t going anywhere and no single government or bank can ever stop it.  In fact I predict that the market may just start using more privacy and security based coins and trade them exclusively and directly for goods, bypassing fiat altogether.  Ironically this is probably the last thing governments and banks want but this is where all of this action is heading towards in my opinion.

 

Ripple Performance Beats Bitcoin and Ethereum!

Despite so much turbulence in the markets Ripple has returned 4.8% vs Bitcoin’s 2.64% in the last 24 hours or Ethereum’s -.75%.  Ripple is proving itself to be able to withstand strong headwinds after nearly hitting the $5 mark last year.  Of course $.70 is a far cry from its all time high but considering the market as of lately this is impressive.  I think despite the concerns over XRP’s future in terms of it being associated with large and central banking clients, there is value in it being a hedge.  This is one of the reasons I invested in Ripple as I feel with increasing government scrutiny, regulation, threats, bad news etc.. that this would all cause Ripple to return much better in the long-term.  However as I’ve said in past posts, there appears to be the very real fear and possibility that Ripple may just dump XRP if the banks tell or pay them to.  In fact I even e-mailed them with detailed concerns from another blog and they had no comment other than asking me to check their news, blog and website so at this point I feel it is very plausible.  Ripple’s affiliation with banks and government will either help it right to the top or it could weight down Ripple.  Besides that I feel Ripple is a fairly good currency but does suffer from a few other flaws that I won’t get into here.

 

CoinmarketCap-2018-03-20

IMF Wants To Regulate Bitcoin with Blockchain!

Christine Lagarde of the IMF has suggested “fighting fire with fire” by regulating Bitcoin with the IMF’s own blockchain technology.  I am not sure what they are proposing on a technical level or what this common is really based on, but let’s read between the lines of the intention.

This is very exciting news as it signals the IMF is acknowledging that cryptocurrency and Bitcoin especially are here to stay.  They wouldn’t regulate something that they don’t expect to survive.

Now the bad news is that the IMF may have something up their sleeves that slows or impedes Bitcoin and other cryptocurrencies from functioning as they should.  After all the IMF has also played roles that many of us do not think is constructive or fair to the countries that have used it.  If we apply the same scenario to Bitcoin it is time to get excited and scared at once.  It also seems disingenuous to imply cryptocurrency has a darkside while implying fiat doesn’t.  I get it and agree, fiat is better controlled so they like it but fiat is still used for crimes all the time.  If fiat wasn’t regulated under their control they would probably make similar statements about fiat instead of cryptocurrency.

The real question is what is the real intention?  Obviously as they’ve stated it is regulation but will the regulation make it so only the elite can trade Bitcoin or do they simply just want their own cut and control of cryptocurrency?  I think if we look at the history of their role and fiat, the truth will lay right in the middle but only as far as what they’ve decided should be the fate and role of fiat.  Both can coexist but do they intend for them to coexist or for one to roll over the other?

Either way announcements like this show us that cryptocurrency is certainly here to stay and it has caught the attention of the entire finance world.

How Governments Should Handle Crypto and ICOs

First of all after seeing so much confusion, panic and misinformation in the news, it is about time each country made a dedicated website for cryptocurrency.  The winners will be the countries who clearly communicate their policy, laws and intentions on handling cryptocurrencies.

Now in all fairness things are moving so fast, governments have genuine reason to fear cryptocurrency (aside from illegitimate reasons…) with most ICOs being absolute scams.  The real reason is of course is that governments can no longer vote or control who can fund themselves, the internet and public will judge.  However, there are still good reasons to have regulation or at least accountability so ICO fraudsters cannot hide overseas and disappear with the coins they collect.  This is my position where I feel the majority of token ICOs have no intention of completing their projects.

Getting back to what government should do, it’s not only ICOs but also the laws surrounding the purchase, use and trade around cryptocurrency.

The first country(s) to make fair, easy and favorable laws surrounding ICOs and cryptocurrency may find itself literally walking into digital gold and could be the next Hong Kong or Singapore of the crypto-finance world.  It’s up for grabs until countries clarify and cement their policies with crypto.

The first step if I were a regulator would be to hold public consultation and establish a staterun/government website domain to encourage discussion.  I also imagine it will be a hard case for government going after their citizens or businesses because they could simply leave the country with their crypto.  I think this is one element that business and government doesn’t like, that they can no longer control what people do with their money.  Typically governments and banks work hand in hand to achieve specific goals but with cryptocurrency, much like the world-wide web (initially) they are trying to find a balance and also ways to reign in control.

This time is very different, there is a lot at stake for governments, banks, people and business.  If a government moves too aggressively against the crypto world it could find itself sidelined and in financial ruin while their citizens and businesses will flock to countries that treat them better.

One of the first known examples of staterun conspiracy to harm cryptocurrency is Poland’s recent Youtube campaign: https://cryptoslate.com/polish-central-bank-caught-funding-anti-cryptocurrency-youtube-campaign/. They can’t be the only one and we know because of the well-timed press-conferences from various countries that threaten to ban ICOs or the currency outright.  On that note, as an investor this gives me more confidence than ever.  If crypto isn’t a big thing, then governments wouldn’t be talking about it.  The fact they warn so much about crypto suggests that governments and banks are well aware it is here to stay.

It could be that some governments are just playing games and waiting to see how things play out.  Perhaps internally if they see their attacks on crypto don’t kill it then they’ve already accepted that they will stop the fight against crypto.  Personally I think they are well aware that they cannot stop it and are maybe buying time so they can launch their own like Japan, Russia and China have announced.

I don’t think there’s a direct comparison but this standoff reminds me of the anti-piracy fight.  It used to be a fringe and underground element, but with crackdowns it actually has become more prevalent and easy for people to engage in piracy. Don’t get me wrong, crypto is not at all illegal or wrong (as compared to piracy) but the governments are essentially treating the crypto world the same way.  Much like the rule of investment after your strategy fails, trying again “won’t be different this time” I believe.

What do you think, how can governments handle crypto better and how would you react to bans and other aggressive action against crypto and related businesses?

2017 and Beyond The Future of Cryptocurrency and Government Financial Regulations

Governments, banks and other large entities have all been murmuring, talking and hinting what the future of cryptocurrency could be or specifically the block chain. They all agree “blockchain” is good, there is no one against it but there has been a lot of confusion about the internet thinking this is equates to government and corporate backing of decentralized cryptocurrencies. I believe this couldn’t be the truth, in fact there have been lots of issues for companies exchanging cyrptocurrency for cold hard cash being unable to wire etc.

The excuse you hear from the big players are concern over fraud, money laundering, etc.. all of which happens in the current fiat monetary system. The true issue behind all the fuss is simply that these decentralized cryptocurrencies allow unhindered free trade around the world regardless of which country you are citizen of and where you are, no one can sanction you or freeze your assets in cryptocurrency. Further, it is of course a huge threat to the current financial system and governments around the world who depend on third party “reserve” banks to print their money. It’s bad news for their monopoly on finance and business transactions worldwide.

Bitcoin Exchanges in China are being shutdown: https://www.usatoday.com/story/money/2017/09/14/china-orders-bitcoin-exchanges-shut-down-report-says/665209001/
Russia says Bitcoin is illegal: https://www.reuters.com/article/us-russia-bitcoin/russian-authorities-say-bitcoin-illegal-idUSBREA1806620140209
Bitfinex sued Wells Fargo for blocking their wires: https://bravenewcoin.com/news/wells-fargo-sued-for-suspending-bitfinex-wire-transfers/
US SEC says they want to regulate coins: https://themerkle.com/sec-may-be-looking-for-ways-to-regulate-the-cryptocurrency-ico-market/
JP Morgan’s CEO Jamie Dimon calls Bitcoin a fraud: https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin

The part in China is most significant because the action in China has coincided with drops in value of the major currencies, as well as Chinese users doing a lot of mining and trading in crytocurrency.

When we take some examples above, this is the general consensus among bankers and government worldwide. They all like blockchain and want to make their own currencies that they control and centralize, but they are certainly against the decentralized ones and as new banking, taxation and other government intervention roles out surrounding cryptocurrency it will be very interesting to see where things head.

I personally think the decentralized currency will always exist and it can and will coincide with other mainstream offerings from banks and governments. There will be a place for both just as cash from other countries is traded for other items whether gold, silver or even electronics and oil. Trade will continue but through a different method of settlement and transfer.

One thing is for sure until we see how things break in terms of government regulations and how their own cryptocurrency’s play out, the value of the original decentralized currencies like Bitcoin, Litecoin, Etherum et al will have wild fluctuations as people react to news that threatens these currencies the same way people would read the news about Greece’s debt and haircut on the bonds they sold. In fact many watch the crypto market including the ICO (Initial Coin Offerings) and note they do seem to function as any other traditional market would in terms of news and advancements.

I believe we are seeing a financial revolution, all currency will soon be crypto and physical cash before we know it may all be stop being used.
The only question is how fast does it all happen and how does the difference between centralized banks and decentralized crypto users play out?