Acceptance and volatility: are they related?

Governments and institutions around the world are paying more and more attention to cryptocurrencies (CC) and the technology that supports them: Blockchain. Some of the attention is negative, but in general, it is clear that more and more attention is positive, supportive and exploitative. As the business and investment world becomes more aware of having a disruptive force at its core, it becomes imperative to examine business processes at this new frontier and compare them to the relatively old, time-consuming and expensive processes they have now. New technologies need new investment capital to grow, and with that growth comes bursts, false starts, and controversy.

Developments in the world of CC and Blockchain are moving fast and furiously as governments and institutions strive 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. explaining why so many seem to go in different directions and change direction frequently. Here are some of the latest developments that serve to illustrate that CC 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 “skills center” set to begin operations in July.
• Kazakhstan has signaled its desire to copy Singapore’s Blockchain permissiveness.
• Belarus has announced that it wants to create a hospitable environment for Blockchain, as an innovative financial transaction 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 on global bond markets. President Nicolás Maduro claims that PETRO raised $735 million on its first day, an assertion that has not been substantiated. Maduro sees the PETRO as “the perfect kryptonite to defeat SUPERMAN” – his analogy of the sanctions imposed by the US, thinking that this currency liberates his country from the control of banks and governments. Perhaps he does not see that PETRO was started by a government – his.
• TD Canada Trust has become the first Canadian bank to join some UK and US banks in banning the use of credit cards to purchase CC.
• South Korea is heading towards the legalization of Bitcoin, indicating that it will consider Bitcoin 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 those steps, making Bitcoin transactions more transparent, more regulated, and 100% legal.
• BlackRock, the world’s largest investment company, continues its bullish forecast for CCs, saying it sees “wider use” in the future.
• Romeo Lacher, chairman of the Swiss stock exchange, believes there are many advantages to launching a crypto version of the Swiss franc, and his organization would support it, adding that he “doesn’t like cash.”
• China’s largest online and traditional retailer, JD.com, has announced the first four startups for its Al Catapult Blockchain incubator program. The Beijing-based program, which has seen applicants 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 the global back-and-forth activity, it is clear that Blockchain is the disruptive technology of this age, and CCs are just one facet of the possibilities enabled. Like the internet investment explosion of the 1990s, Blockchain and CC investing will have winners and losers; however, we do not want this to become the huge bubble that destructively burst with many early DOT COM investments in the 90s. What we do want to see is a well-reasoned approach to Blockchain developments and investments.

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