Acceptance and Volatility – Are They Related?

Governments and institutions all over the globe are increasingly paying attention to Crypto Currencies (CC’s) and the technology that underpins them all – Blockchain. Some of the attention is negative, but on balance, it is clear that more and more of the attention is positive, supportive, and exploitive. As the business and investment world becomes more aware of having a disruptive force in its midst, it becomes imperative to examine business processes in this new frontier and compare them to the relatively old, slow, and expensive processes they have now. New technologies need new investment capital to grow, and with such growth comes spurts, false starts, and controversy.

Developments in the world of CC’s and Blockchain are coming along fast and furious as governments and institutions make efforts to harness the technology, tax all profits, protect their investments, and protect their constituents and customers – – a complex balancing act that goes a long way in explaining why many seem to be going in different directions, and changing directions frequently. Here are a few of the latest developments that serve to illustrate that CC’s and Blockchain are gradually being accepted into the mainstream, but still grappling with regulation, control, and stability:

• Uzbekistan will publish its plans to regulate Bitcoin in September 2018, with a Blockchain “skill center” set to begin operation in July.
• Kazakhstan has signaled its desire to copy Singapore’s Blockchain permissiveness.
• Belarus has announced it wishes to create a hospitable environment for Blockchain, as an innovative financial transactions technology.
• Venezuela has created the “PETRO”, a CC created to raise cash as Venezuela approaches economic collapse. The hope is that it will be a way around sanctions that prevent Venezuela from raising money in the global bond markets. President Nicolas Maduro claims that the PETRO raised $735 million on its first day, a claim that has not been substantiated. Maduro sees the PETRO as “the perfect kryptonite to defeat SUPERMAN” – his analogy of the US imposed sanctions, thinking that this currency frees his country from the grip of banks and governments. Perhaps he does not see that the PETRO was initiated by a government – his.
• TD Canada Trust has become the first Canadian bank to join with some UK and US banks in banning the use of credit cards to purchase CC’s.
• South Korea is heading towards legalizing Bitcoin, indicating that it will be considering Bitcoin as a liquid asset. Being that South Korea is at the forefront of the CC marketplace, the impact of their decisions will be significant and global. Japan has already taken those steps, making Bitcoin trades more transparent, more regulated, and 100% legal.
• BlackRock, the world’s largest investment company, continues its bullish forecast for CC’s, saying it sees “wider use” in the future.
• Romeo Lacher, chairman of Switzerland’s stock exchange, believes there are a lot of upsides to releasing a crypto version of the Swiss franc, and his organization would be supportive, adding that he “doesn’t like cash.”
• China’s largest online and brick and mortar retailer JD.com has announced the first four startups for its Al Catapult Blockchain incubation program. The Beijing-based program, which has seen candidates from as far afield as Australia and the UK, aims to use the company’s vast Chinese infrastructure to develop new Blockchain and artificial intelligence applications.

With all of the global to and fro activity, it is clear that Blockchain is the disruptive technology of this era, and CC’s are just a facet of the possibilities enabled. Just like the Internet investment explosion of the 90’s, Blockchain and CC’s investments will have winners and losers, however, we do not want this to turn into the huge bubble that burst destructively with many early DOT COM investments in the 90’s. What we do want to see is a well reasoned approach to Blockchain developments and investments.

Volatility will continue to be the norm in this market space for some time, as we see increasing acceptance, innovation, and regulation. Failures will happen and successes will emerge, driving governments, institutions, investors, and innovators, to continually adjust their processes and their thinking. Volatility is normal and healthy at this stage.