Acceptance and volatility: are they related?

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Governments and institutions around the world are paying more and more attention to cryptocurrencies (CC) and the technology that underpins them: Blockchain. Part 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 in their environment, it becomes imperative to examine business processes in this new frontier and compare them to the relatively old, slow, and costly processes that they have now. New technologies need new investment capital to grow, and with that growth, there are outbreaks, false starts, and controversy.

Developments in the world of CC and Blockchain are occurring rapidly and furiously as governments and institutions strive to leverage technology, tax all profits, protect their investments, and protect their components and customers – a complex balance that goes a long way in explaining why many seem to go in different directions and change direction frequently. These are some of the latest developments that serve to illustrate that CCs and Blockchains are gradually being accepted into the mainstream, but that they still face 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 expressed a desire to copy the permissiveness of Singapore’s Blockchain.
  • Belarus has announced that it wants to create a hospital 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 to evade sanctions that prevent Venezuela from raising money in world bond markets. President Nicolas Maduro claims that PETRO raised $ 735 million on the first day, a claim that has not been confirmed. Maduro sees PETRO as “the perfect kryptonite to defeat SUPERMAN”: its analogy with US-imposed sanctions, thinking that this currency frees his country from taking banks and governments. He may not see that PETRO was initiated by a government of his.
  • TD Canada Trust has become the first Canadian bank to join some banks in the UK and US in banning the use of credit cards to buy CC.
  • South Korea is heading towards legalizing Bitcoin, indicating that it will consider Bitcoin as a liquid asset. As South Korea is at the forefront of the CC market, the impact of its decisions will be significant and global. Japan has already taken these steps, making Bitcoin transactions 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, president of the Swiss stock market, believes there are many advantages to releasing a cryptographic version of the Swiss franc, and his organization would support it, adding that “he doesn’t like cash.”
  • China’s largest online retailer, JD.com, has announced the top four startups for its Al Catapult Blockchain incubation program. The Beijing-based program, which has featured candidates from countries as far away as Australia and the United Kingdom, aims to use the company’s vast Chinese infrastructure to develop new Blockchain and artificial intelligence applications.

With all the global activity going back and forth, it’s clear that Blockchain is the disruptive technology of this era and CCs are just one facet of the possibilities enabled. Like the Internet investment boom of the 90s, Blockchain and CC investments will have winners and losers, but we don’t want it to become the huge bubble that exploded destructively with many early DOT COM investments in the 90s. What we 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 to come, as we see increasing acceptance, innovation and regulation. Failures will occur and successes will emerge, which will drive governments, institutions, investors and innovators to continually adjust their processes and thinking. Volatility is normal and healthy at this stage.

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