Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
How A NASA Scientist Could Trigger The Next Cannabis Boom - 17th Dec 18
iShares Russell 2000 IWM Leading Stock Market Decline - 17th Dec 18
Where is the Dow Stock Market Santa Rally? - 17th Dec 18
With Weaker Climate Consensus, Expect Elevated Climate Change - 16th Dec 18
SMIGGLE Advent Calendar 2018 UK Contents - What You Get Look Inside Review - 16th Dec 18
Is there a Lump of Coal in Santa's Stock Market Bag? - 16th Dec 18
This Market Will Drive Gold in 2019… - 16th Dec 18
Gerald Celente:Central Banks Can’t Stop a 2019 Debt Disaster - 16th Dec 18
Gold Stocks Triple Breakout - 15th Dec 18
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

Cryptocurrency: Money or Asset?

Currencies / BlockChain Mar 29, 2018 - 10:30 AM GMT

By: EconMatters

Currencies

Some of the hypes and speculations surrounding bitcoin and cryptocurrency is that central banks may create their own digital currencies thus replacing fiat money altogether. A G20 draft communiqué already states cryptocurrencies “lack the traits of sovereign currencies” and seeks cryptocurrency regulation recommendations by July 2018. The Bank of International Settlements (BIS) also published a report last month entitled “Money in the digital age: what role for central banks?” stating:

“… while cryptocurrencies may pretend to be currencies, they fail the basic textbook definitions. Most would agree that they do not function as a unit of account. Their volatile valuations make them unsafe to rely on as a common means of payment and a stable store of value.”


Currently, cash is still king and most of the central banks have not gone into the coin business, but the usefulness of cryptocurrency has not lost on all of us. Countries with serious currency or financial troubles may find cryptocurrency a more stable store of value providing stability to the economy.

Solving Sanctions One at a Time

For example, Iran and Venezuela are both subject to trade sanctions from the United States. Venezuela in particular is suffering from triple-digit annual inflation rate set to jump to more than 2,300 percent in 2018 according to IMF. The nation's official currency has lost much of its value amid recent political turmoil that Venezuela came up with an oil-backed “petro” cryptocurrency and raised more than $735 million.

Iran government also announced in February that state-run Post Bank is working on developing a cryptocurrency. There are also reports linking North Korea to cryptocurrency mining and other attempts to use the digital currencies as a way to evade sanctions and that Kim Jong-un could own as much as 11,000 bitcoins worth about $87 million at today’s price.

Big Banks Strategy

Some other countries such as China, Russia and Singapore also have been experimenting with developing their own digital currencies. Banks, on the other hand, are much more cautious. The volatility of Bitcoin et al has prompted major banks like JPM and Citigroup to ban purchases of Bitcoin and other cryptocurrencies on their credit cards. But that is not to say big banks are staying away forever.

Barclays and Coinbase and Barclays just recently revealed a first major partnership between a U.K. bank and cryptocurrency exchange. This is part of the effort by Coinbase to offer clients a faster and safer payment and transfer process.

Another move by banks and financial services firms is contemplating using blockchain as a record of asset ownership replacing a series of internal ledgers. The idea is to make tamper-proof databases costing a lot less than a conventional database. Santander Bank estimates that blockchains could save banks up to $20 billion a year by 2022.

Safety and Protection

Theoretically, cryptocurrencies' underlying blockchain technology eliminates the need for a third party and allows for instant, irrevocable and secure transactions. However, bitcoin and cryptocurrency was purposely designed with anonymity and lack of control in mind (think money laundering and terrorism financing), and user/consumer security and protection was not the main focus of the original protocol. That is one reason (among many others) why regulators around the world have widely viewed bitcoin and cryptocurrency with a critical eye.

Cryptocurrency NWO?

If crypotcurency is an asset class, then there’s a need to have cryptocurreny exchanges to trade one token or coin for another with digital encryption provides individuals with control over their data; privacy, security and fluid transfer of assets. The cryptocurrency world seems to envision a “new internet” is needed for a new “decentralized world”, which unfortunately is yet to be created/invented.

Right now, Cryptocurrencies have become more popular as trading instrument than a payment system. Bitcoin and cryptocurrency may one day become the world virtual currency on the “new internet” in the new “decentralized world”, but it is not now.

Disclosure: No Positions

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2018 Copyright EconMatters - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

EconMatters Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules