Acceptance and volatility – are they related?

Governments and institutions around the world are paying increasing attention to cryptocurrencies (CCs) and the technology that underlies them all – blockchain. Some attention is negative, but the bottom line is that more and more attention is positive, supportive, and exploitative. As the business and investment world becomes more aware that it has a disruptive force at its midst, it becomes imperative to examine business processes in this new frontier and compare them to the relatively old, slow and expensive processes that they now operate to have. New technologies need new investment capital to grow, and with such growth come surges, false starts, and controversies.

Developments in the world of CCs and blockchain are moving fast and furiously 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, who goes a long way in explaining why many seem to go in different directions and often change directions. Here are some of the latest developments that illustrate how CCs and blockchain are gradually becoming mainstream but still grapple with regulation, control and stability:

  • Uzbekistan will publish its plans to regulate bitcoin in September 2018, with a blockchain “centre of excellence” expected to become operational in July.
  • Kazakhstan has signaled its desire to copy Singapore’s blockchain permissiveness.
  • Belarus has announced its intention to create a hospitable environment for blockchain as an innovative financial transaction technology.
  • Venezuela has set up “PETRO”, a CC created to raise money as Venezuela approaches economic collapse. The hope is that this will be a way to circumvent sanctions preventing Venezuela from raising money in global bond markets. President Nicolas Maduro claims that PETRO raised $735 million on day one, a claim that has not been substantiated. Maduro sees the PETRO as “the perfect kryptonite to defeat SUPERMAN” – his analogy to the sanctions imposed by the US, as he believes this currency frees his country from the grip of banks and governments. Maybe he doesn’t see that PETRO was initiated by a government – his.
  • TD Canada Trust is the first Canadian bank to join forces with some UK and US banks to ban the use of credit cards to purchase CCs.
  • South Korea is heading toward bitcoin legalization, suggesting it will consider bitcoin a liquid asset. With South Korea at the forefront of the CC market, the impact of their decisions will be significant and global. Japan has already taken these steps and made bitcoin trading more transparent, regulated and 100% legal.
  • BlackRock, the world’s largest investment firm, continues its optimistic outlook for CCs, saying it sees “broader use” in the future.
  • Romeo Lacher, President of the Swiss Stock Exchange, believes there are many benefits to releasing a crypto version of the Swiss franc and his organization would support him, adding that he “does not like cash”.
  • China’s largest online and brick-and-mortar retailer has announced the first four startups for its blockchain incubation program, Al Catapult. The Beijing-based program, which has seen candidates from Australia and the UK, aims to leverage the company’s vast Chinese infrastructure to develop new blockchain and artificial intelligence applications.

With all the global back and forth activity, it is clear that blockchain is the disruptive technology of this era and CCs are just one facet of the possibilities. Just like the internet investment explosion of the 90s, blockchain and CC investments will have winners and losers, but we don’t want this to become the huge bubble that destructively burst with many early DOT-COM investments in the 90s. What we want to see is a well-reasoned approach to blockchain development and investment.

Volatility will remain the norm in this area of ​​the market for some time to come as we see increased adoption, innovation and regulation. Failures will happen and successes will come, driving governments, institutions, investors and innovators to continuously adapt their processes and thinking. Volatility is normal and healthy at this stage.