Bitcoin, created in 2009 by Satoshi Nakamoto, as the first cryptocurrency based on an operating system for a decentralized digital currency. Its key features are security and anonymity!
Today exists more than 1500 alternative cryptocurrencies know as “Altcoins” which originates from Bitcoin Blockchain Technology.
Cryptocurrencies are unlike worldwide central banks that use Quantitative Easing to create new money. They are digital and decentralized cartographic currencies; with a limited supply that is mined by the community ensuring its secure validation of transactions.
Bitcoin value is based only on supply vs demand whilst the big majority of altcoins are based on a business value. This makes Bitcoin a store of value like other currencies (for example Dollar, Euro etc.). Altcoins are seen as company’s stock market shares with private capitalization (this will be covered in my next article).
Security, low fees and rapidity of transactions also make Bitcoin a very cheap and fast way of exchanging value and executing payments. These are key features to the success of Bitcoin versus banks, which are over-regulated, slow and expensive with a central point of attack.
As we have seen in the last years, trillions of dollars were injected into the economy by banks, creating money without the correspondent increase of national gross product. This puts the actual economical system and everyone wealth in danger (see my previous article).
As a result, today mainstream considers Bitcoin as an Active in terms of medium/long-term investment. Its limited supply adds value per coin.
According to the IMF, the crypto market presently represents less than 1% of the total financial market cap.
Bitcoin, represents 45% of that market cap above all cryptocurrencies with a value of 260 billion US dollars. The projected forecast for the end 2018 is approximately 900 billion US dollars.
The IMF, in the summer 2017 Argentina meeting, concluded that the cryptocurrency market should not be regulated as for now.
This is mainly due to the huge pressure made by central banks on governments not to regulate the crypto market; as private Banks would lose trillions in fees and funding in the future leading them to bankruptcy. Funny thing for banks!
Now you can see that Bitcoin is safer than actual currencies offering to all investors a bright future.
I understand the point of view of my colleagues from the economic and finance world; that have a classical point of view about market regulation. However, Bitcoin and cryptocurrencies in general cannot be regulated. No one person owns the blockchain, everyone utilize its technology making it uncontrollable by any entity.
We foresee in the next months, banks creating their own digital currency.
The Central Bank regulation will no more be a critical issue in the future.
Armando De Faria
Economist