Bitcoin fall Brings Dose of Reality

Time to study Cryptocurrency purpose

The fall in the value of Bitcoin this week should bring about a period of reflection concerning the use and valuation of cryptocurrencies. It is unfortunate that all it has done is divide those in this community into two clear camps.

On one side are those who have invested some time ago and are sitting on profits but were too greedy at $18k to cash out and have resorted to social media to say things like “This could be your last chance to buy below $10k” or “the biggest fall in percentage terms was when it fell from $20 to $2 in the wake of Mt. Gox”.

The other side is the naysayers who are busy telling everyone who will listen “I told you so” after selling their twenty bitcoin for $100.

What is missing, (of course you know what I am going to say) is the middle ground who has no huge inherent opinion since they only bought to study how it works or for other more academic reasons. I have said this before, cryptocurrency is in its infancy. In much the same as dot com was a gold mine to some and a disaster for others, look at today twenty-five years later. the pace innovation is moving at, that time is shrinking almost exponentially. Wait five or ten years and see what this new and innovative tool can bring to global finance then.

Revolution is an impatient master

Unfortunately, when the Bolsheviks rose up in 1917 or Castro overthrew Batista in 1959 one thing neither they nor their supporters had was patience. They didn’t sit back and negotiate or take time over a grand plan, it all had to happen now.

Such is the case with the latest revolution, which is now taking place in the world of finance. Cryptocurrency revolutionaries have no time for Central Banks, Finance Ministries and Governments who are trying to halt progress by trying to bring regulation to the wild west.

They seem to miss just about the most vital point of cryptocurrency. It is designed to be unregulated in the classic of the term. De-regulation is de-centralisation and that is where regulators should be concentrating. Looking at the fabric of blockchain as the building blocks of this revolution rather than trying to fit a “square bitcoin peg into a round FIAT currency hole is the way forward. Regulators need to become as revolutionary as the “crypto pioneers” in order to keep up.

It may not be pretty, but it must be effective. Those of a regulatory mindset don’t tend to be innovative in their outlook so as Sam Cooke said, “A change is gonna come”.

Meanwhile in Brexitland

Theresa May disappeared to China this week to drum up some trade deals but only succeeded in demonstrating how the mighty have fallen. In the James Clavell series of books which started with the acclaimed “Shogun”, he describes how Britain was able to dominate China and wrest Hong Kong from them. Unfortunately, Mrs May didn’t have the same impact. Eight-billion-pound worth of trade deals is like “pocket change” to Xi Jinping.

Back at home a report was leaked which claimed that the UK economy could slow by up to 8% depending on what kind of Brexit is finally agreed, if any.

The two sides set put their transition positions. The main stumbling block will be the treatment of EU residents arriving during the transition period. The European Commission rejected a call from the City of London to allow British Banks unfettered access to EU markets in exchange for EU banks being allowed to retain branches in London and being forced into the capital-intensive process of creating subsidiaries. I may not be a betting man, but I would be very surprised if the EU doesn't get its way without having to make such a large concession.