My thoughts on bitcoin years ago…
The information age will provide alternatives not only to capital markets (e.g. P2P Lending and Crowd Funding) but to money as well.
Bitcoin or not, the incumbent political system’s sustained policies of debasement will only accelerate and intensify the search for currency alternatives premised on the burgeoning forces of “decentralization”.
ECB Says Bitcoin’s Origin is from the Austrian School November 13, 2012
I’d add that if bitcoin is a manifestation of declining trust on the US dollar standard or even fiat money, then bitcoin will flourish not only in Asia but around the world despite sustained harassment by governments.
Bitcoin’s Future is in Asia and More November 20, 2013
I would add that bitcoin’s evolution has also been a function, not only of as a cross between fiat money and commodity money, but also of the technology adaption lifecycle or technology diffusion via the S-curve.
Matthew Ridley: Bitcoin as Synthetic Money April 20, 2013
Sadly, as a non-IT geek, I had no confidence in opening bitcoin wallet for fear of being hacked. Thus I wasn’t able to participate in the current mania.
Nevertheless, opportunities abound.
The blockchain technology from which bitcoin operates from would most likely revolutionize many aspects of modern day commerce. As an example, through radical decentralization of the share markets, stock exchanges would be compelled to adapt or die. Share exchanges would be channeled through nodes via the Peer to Peer (P2P) platform which eliminates the need for settlement, depositories and transfer agents.
The first stock exchange to embrace the blockchain technology is the Australian Security Exchange.
The pioneer company to issue and have its shares traded on the bitcoin-blockchain platform is Online retailer Overstock.com.
The short of it, the blockchain technology, through its many potential applications, is the future. Bitcoin is a testament to this. And the blockchain technology will be fused with many other evolving technology breakthroughs as Artificial Intelligence, Machine Learning, Big Data, Quantum Computing, the Internet of Things, Mobile Business and Banking applications and many more.
In as much as the stock exchange would have to evolve, this applies to other appurtenant intermediaries. Yes, my role is about to go the ways of the dinosaur. So I would have to look for alternatives.
Now to the Bitcoin Mania…
The cryptocurrency (digital currency) Bitcoin (BTC) has taken the world by storm!
Bitcoin relentless upside streak has continually carved up astounding feats.
Bitcoin’s inexorable price surges have elevated its market capitalization to eclipse many of the world’s biggest companies. It briefly surpassed VISA. It has bested PepsiCo, Boeing and McDonald’s. South Korea’s bitcoin prices likewise momentarily exceeded JP Morgan.
Bitcoin’s market cap has even advanced beyond the nominal GDPs of nations like Pakistan and Ireland!
In local currency or the peso, one bitcoin is almost equivalent to a brand new sedan!
And many people have done amazing things to join the Bitcoin shindig.
One person has sold everything he owned (business and house) to speculate on Bitcoin. He and his family now reside in a campsite to await for the ‘ultimate cryptoboom’.
And because one IT specialist accidentally threw his hard drive away when Bitcoin prices had been inactive years ago, he has now been digging the landfill to recover his lost 7,500 bitcoins!
Hordes of people have been opening new bitcoin accounts (300K new accounts on November 22 to 26). Last week, one of the largest bitcoin exchanges buckled from the sheer volume of new accounts which caused energy outages.
Some central banks have taken the bitcoin storm with trepidation. The Indonesian government intends to ban it. The governments of India and China have warned against Bitcoin. However, if you can’t beat them then join them. 40% of central banks have reported plans of introducing digital currencies by 2019
Bitcoin is the epitome of the Fear Of Missing Out (FOMO) trade.
Fret Not. The FOMO trade is ubiquitous, or almost everywhere.
The FOMO trade in the stock market may not be in the same degree in the gains as BTC. Nevertheless, the slope of price actions has resonated.
The FTSE world index has been strikingly up by 19.44% in 2017 while the MSCI Asia Pacific (MXAP) has soared by 25.22%!
Most of the Asian bellwethers have enthralled by the FOMO trade.
Mongolia’s MSE and Vietnam’s VSN have been the present leaders. Their price actions have accelerated to boost 2017 returns to a whopping 85.6% and 41.41% respectively!
Many think that BTC has been the star of 2017.
In reality, nominal returns of Venezuela’s Caracas Stock Index have dwarfed Bitcoin’s. The IBVC has zoomed by a staggering 3,975% this year which is more than twice BTC’s returns! But that’s because Venezuela has been suffering from hyperinflation (CPI of 1,369%)!
In the case of Venezuela, the government prints an avalanche of money, consequently, a run on the currency ensues accompanied by a panic safe-haven bid on stocks which makes it “soar”.
Needless to say, the global risk ON environment puts into the spotlight Bitcoin’s sterling performance.
Like stocks, some cheerleaders say that higher bitcoin prices will engender wealth for society. Such hokum confuses asset inflation (money) with economic progress (wealth).
Asset inflation merely redistributes a claim on wealth from buyers to sellers. It does not generate societal prosperity. As the great Ludwig von Mises once wrote,
Economic progress in the narrower sense is the work of the savers, who accumulate capital, and of the entrepreneurs, who turn capital to new uses.
While BTC’s transformational technology indeed has merits, the blowoff in the frenzied bidding of BTC’s prices doesn’t justify these.
