As someone involved in cryptocurrencies early in the game, you would speculate that I’m now a billionaire. Yes, I did invest in bitcoin in 2013 when it was just $60. Now, it’s hovering around the $100,000 per bitcoin mark (and ETH just broke $4,000). Congrats if you made the investment ten years ago. Nevertheless, during that ride – and it has been a ride – cryptocurrencies have rapidly risen and just as rapidly crashed. Add on to this the number of scammers and gamers in this sphere, and it is not the most comfortable space. It is why I have often called crypto a Wild West, but something has changed. The change is that cryptocurrencies are becoming institutionalised.
Under the new US administration, due to come into force in January, Donald Trump and his best buddy Elon Musk, along with the new head of the SEC Paul Atkins, will make cryptocurrencies mainstream and, specifically, the US dollar tied to bitcoin will become the reserve digital currency of the world. That’s one view btw, but that view is the reason why bitcoin’s valuation has increased dramatically in the past month since Trump was voted to become the President-elect. However, there are still many detractors who would say bitcoin has zero value and is just an illusion. Well, for those detractors, I think you are now behind the 8-ball as, when Jerome Powell, the head of the Federal Reserve, says that bitcoin is “digital gold”, you are missing a trick.
Federal Reserve Chair Jerome Powell addressed the perception of Bitcoin at the DealBook Summit, asserting that the cryptocurrency is more akin to gold than the U.S. dollar. “People use Bitcoin as a speculative asset. It’s like gold—it’s just virtual and digital,” Powell said during the discussion.
This seems to be a major shift from the last fifteen years of bankers and regulators saying that bitcoin is bad and blockchain is good (note that was 2015), to bankers and regulators more and more accepting that cryptocurrencies are another form of asset. Digital assets admittedly, but just another form of asset.
What seems to be happening is a move from the old world to the new and, going back to my Wild West comment, a new world that is structured in a new way.
The next US administration seems to want to embrace cryptocurrencies in an inclusive structure that is governed by the network, but supported by governmental institutions who are backed by laws and regulations. This might honestly be a seismic moment as, if bitcoin and its brethren are backed by governments and laws, then crypto could truly become mainstream for the person on the Clapham Omnibus.
Having said that, the whole idea of bitcoin is to avoid governments, laws and intermediaries like banks. That was Satoshi’s dream:
“I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party.”
The core concept of bitcoin and its siblings is that money can work over the network, governed by the people and with no state involved. This is the core battle between centralised versus decentralised currencies, and a core discussion in my latest book Intelligent Money.
This makes it interesting that the next US administration may make a decentralised currency work in a centralised structure. If that happens then yes, bitcoin could reach the million-dollar valuation or more, that many have predicted for many years. The only thing is that it’s still hard to use crypto for anything other than a speculative investment. After all, how often do you find a shop that would prefer crypto to money?
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
