Governments and institutions around the world are increasingly paying attention to cryptocurrencies (CC) and the technology that supports them all – Blockchain. Part of the attention is negative, but in the end it is clear that more and more attention is positive, supportive and exploitative. As the business and investment worlds become more aware that they have a disruptive force in their environment, it becomes imperative to examine business processes at 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 come incentives, false movements and controversies.
Events in the CC and Blockchain worlds are fast and furious, with governments and institutions making efforts to harness 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 it makes many go in different directions and often change direction. Here are some recent developments that serve as an illustration that CC and Blockchain are gradually being accepted in the mainstream, but are still struggling with regulation, control and stability:
- Uzbekistan will announce its plans to regulate Bitcoin in September 2018, with the Blockchain “skills center” due to start operating in July.
- Kazakhstan has signaled its desire to copy Singapore’s Blockchain license.
- Belarus has announced that it wants to create a hospitable environment for Blockchain, as an innovative financial transaction technology.
- Venezuela has created “PETRO,” a CC created to raise cash as Venezuela approaches economic collapse. He hopes it will be a way to circumvent sanctions that prevent Venezuela from raising money in global bond markets. President Nicolas Maduro claims that PETRO raised $ 735 million on the first day, an unsubstantiated claim. Maduro sees in PETRO “the perfect kryptonite for the defeat of SUPERMAN” – which is his analogy of American sanctions, thinking that this currency frees his country from the grip of banks and governments. He may not see that PETRO was initiated by the government – his.
- TD Canada Trust became the first Canadian bank to join some British and American banks in banning the use of credit cards to purchase CC.
- South Korea is moving towards legalizing Bitcoin, which indicates that it will consider Bitcoin as a liquid asset. Since South Korea is at the forefront of the CC market, the impact of their decisions will be significant and global. Japan has already taken these steps, making bitcoin trading more transparent, regulated and 100% legal.
- BlackRock, the world’s largest investment company, continues the bull’s forecast for CC, saying that it sees “wider use” in the future.
- Romeo Lacher, chairman of the Swiss stock exchange, believes there are a lot of good sides in issuing a crypto version of the Swiss franc, and his organization would be supportive, adding that he “doesn’t like cash”.
- China’s largest online retailer of brick and mortar JD.com has announced the first four launches of its Al Catapult Blockchain incubation program. The Beijing-based program, which has seen candidates even from Australia and the UK, aims to use the company’s vast Chinese infrastructure to develop new blockchain and artificial intelligence applications.
With all the global activity back and forth, it is clear that Blockchain is a disruptive technology of this era, and CCs are just an aspect of the capabilities provided. Just like the explosion of internet investment in the 90s, the investments of Blockchain and CC will have winners and losers, however, we do not want this to turn into a 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.
Instability will be the norm in this market space for some time to come, as we see increasing acceptance, innovation and regulation. There will be failures and there will be successes that force governments, institutions, investors and innovators to constantly adjust their processes and their thinking. Volatility is normal and healthy at this stage.