BOE Governor talks about the advantages and disadvantages of Cryptocurrency – In a speech at the Scottish Economics Conference Bank of England (BOE) Mark Carney made a number of sweeping statements, some positive, some not so much. Let’s break down his most poignant ones..
“Cryptocurrencies have failed as a form of money”.
- Ok, I have to give him this one. Yes, fundamentally Crypto so far has failed at being a “true currency”. By that I mean a fair means to buy and sell goods and services. Some will argue this but let’s be fair, how does that guy who bought a Pizza for 10,000 BTC now feel? Not great. I’m sure there have been a whole host of similar situations using alternative coins. As things stand Crypto is largely being used as an Investment vehicle and a sphere in which to test and implement new Blockchain based technology. Eventually, when regulation steps in, prices will start to stabilise and only then might Crypto start to be used as a true form of currency.
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,”.
- This is a great statement and one that I am glad the BOE Governor himself has made. Crypto needs credibility. It is managing to garner a large portion of media limelight but only because of its volatility. As ‘hodlers’ we are now used to this and embrace it. Most of ‘Average Joe Public’ are not and never will be until they feel its “safe”. By safe I mean as safe as the DOW Jones has been this past month – one rollercoaster to another, one with a park attendant at the helm and one without.
- Being held to the same standards as FIAT and other regulated Financial Assets and Activities places Crypto on the same playing field. It allows the institutional players to legitimately and directly participate in Cryptocurrency. Yes, it will have an immediate adverse effect upon the freedoms and growth rates we now enjoy with crypto, but it will ultimately lead to a better Crypto market. It’ll drive out ‘shitcoins’ and give a solid base for quality coins to build from.
“For many reasons the crypto-assets in your digital wallets are unlikely to be the future of money,” “But that is not meant to dismiss them. Their core technology is already having an impact. Bringing crypto-assets into the regulatory tent could potentially catalyze innovations to serve the public better.”
- This statement is something I think about often and one that I believe is a huge threat to the entire Crypto space. What is stopping any of the major players and regulatory authorities from starting their own Cryptocurrency. ICO’s pop up every few days, we invest almost blindly into them believing that they might be the next big thing. But what would happen if Amazon, Facebook, JP Morgan, the BoE, the FED… created their own Crypto? They have immediate “credibility” (kind of). Yes, this goes against the undercurrent of anti-establishment embedded within Crypto Culture but let’s not forget “We” are still small fry. Cryptocurrency still only accounts for 0.3% of all Global Assets. It only takes one motivated large player to disrupt the disruptee. I know that there are many arguments that claim that this cannot happen and will not. But I disagree.
- Yes, Crypto/Blockchain is the future but Mark Carney makes valid point when he says – “For many reasons the crypto-assets in your digital wallets are unlikely to be the future of money,”.
- Lets see what regulation brings and the space evolves in 2018. I’m willing to bet that it will likely change in a way no one expected.