Bitcoin and cryptocurrencies have been under discussion for months now. The central banks have been actively watching the crypto markets and tried to create laws for it.
Clearly, the valuation of the most famous cryptocurrency is difficult to calculate or estimate. Maybe we should look at the mining side: It requires the electricity consumed by 290,000 homes and the number is still growing.
In December two Bitcoin ETFs were listed on the New York Stock Exchange (NYSE). Often on a moderately liquid underlying, the launch of ETFs corresponds to an increase in the same underlying, issuers being forced to buy it massively before listing.
We will see if there are a lot of courageous people to buy Bitcoin under $15,000, but it will undoubtedly be supported in the short term by the launch of crypto-hedge funds. The capitalization of Bitcoin is not likely to have a contagion effect because it is not systemic.
But if the International Monetary Fund is studying the use of the blockchain for issuing an international currency (the SDR – Special Drawing Right), central banks now all have an opinion on the issue:
- The FED considers that the lack of transparency is a problem, but Jerome Hayden Powell believes that Bitcoin is not important enough to weigh on the US financial system.
- The European Central Bank believes that Bitcoin replicates the bubble of the tulip, but just like Powell, Mario Draghi believes that the problem is not important enough.
- The People’s Bank of China wants to keep control and if the interest is marked, China has banned ICOs and trading platforms on its soil.
- The Bank of Japan is in the study phase while the country already has the largest trading platforms in the world.
- The Bundesbank is actively investigating the use of blockchain in the means of payment but believes that Bitcoin is highly speculative.
- The Bank of England believes that cryptocurrencies are part of a possible financial revolution. While Carney believes that the road to transforming the Pound into a cryptocurrency will be very long, he thinks that the blockchain in the management of accounts and financial data is very promising.
- The Banque de France believes that Bitcoin is the dark side of the force.
- The Bank of India is opposed to any form of cryptocurrency arguing that they are used for money laundering. But of course, the BoI has a working group on the blockchain.
- Banco Central do Brasil sees no immediate risk to its financial system in the progress of Bitcoin.
- The Bank of Canada believes that Bitcoin and other cryptocurrencies are assets. There is even a working group on the issue of its own cryptocurrency.
- The Bank of Korea believes that it is an instrument for criminals and the authorities are studying a capital gains tax. Some believe that the blockchain could hurt some Korean technologies.
- The Bank of Russia has already expressed its doubts and fears about the digital currencies. It talks about “Pyramid Schemes”.
- The Australian Central Bank believes that this is only speculation to wash dirty money.
- The Turkish Central Bank believes that digital currencies could bring stability to the financial system if they are well built.
- The Central Bank of the Netherlands is the most advanced because it has already issued its own digital currency, DNBcoin. It pushes for the use of blockchain in settlement/ delivery.
- The Reserve Bank of New Zealand believes that Bitcoin is too volatile.
- The Central Bank of Morocco believes that any transaction with digital currencies is a crime.
- Finally, the Bank for International Settlements, an international financial institution owned by central banks, is open to the use blockchain.
So yes, Bitcoin will have a future, maybe brilliant. Or like AOL in 1999, it will leave its place to other blockchain technologies in the coming years or months. It is clear that these will have as much impact as the Internet had on our economy and society. When investing in cryptocurrency you should never lose sight of this component and not run after an asset without understanding its environment.