Bitcoin LATEST: Cynic says ‘list’ sparked crypto BOOM and reveals what 2018 has in store
As Bitcoin continues to make headlines around for the world for rabid price volatility, another move towards the centre-ground of capital finance and continues unabated with news over the last fortnight that Goldman Sachs and The New York Stock Exchange (NYSE) are planning to offer Bitcoin trading.
But, during the session Martin Walker, director of the Centre for Evidence Based Management, told MPs during the session led by Conservative MP Nicky Morgan, bitcoin and blockchain are still “an area where some people can make lots of money, but there is very little obvious benefit to society”.
Mr Walker argued much of the hype around the technology emerged from a “list” circulated on social media and copied from “consultancy paper to consultancy paper”.
Talking to Express.co.uk, Mr Walker said the industry has arrived to a point where it is really a niche technology following the “excitement” of the recent “cryptocurrency and ICO”.
He said: “A number of people have made a great deal of money. Money that is obtained at someone else’s expense as opposed to genuinely creating wealth.”
This money-making triggered a so-called ‘hype period’ that pushed crypto into the national limelight, and saw Bitcoin’s value multiply more than 13 times during 2017 following a mass rush of speculators putting cash into what looked like a simple get-rich-quick scheme. However, cryptos fell 50 percent in the first three months of 2018 and with the prices now at $8,289 bitcoin the largest cryptocurrency by market capitalisation, has dropped $11,494 since Jan.
However, Mr Walker says that the seeds for the Bitcoin and blockchain boom were sowed in March 2014. He said: “A webpage started circulating on social media listing how Blockchain – Bitcoin version or otherwise – could solve a long list of problems.
“No explanation of how or why it would be better.”
This list included suggestions to “store nuclear launch codes on the blockchain” and although some of the claims were edited out, “the list ended up in the reports of serious consultancies, the media and governments”.
The “fad” then developed for talking up bitcoin and blockchain at every finance conference or keynote address and Mr Walker says that senior figures in the banking world are guilty of believing in an idea “without checking whether there is good evidence it works.” He argues that blockchain was being applied as the potential solution regardless of whether or not it actually “fit the problem”.
So how in 2018 should the UK government treat bitcoin and blockchain?
Mr Walker says that blockchain as a family of technologies should be treated by UK lawmakers like any other technology “ie ‘Is it a good solution to the problem?’ as opposed to a belief system”.
He adds that, in six months, we will see more slow progress on the enterprise side for real applications but expect people to question why some of those applications need to use Blockchain type features.
On the move towards regulation from the UK’s Financial Conduct Authority, he adds that there are “very good public interest grounds for putting in place the most restrictive regulatory regime possible around cryptocurrencies, banning where necessary and possible”.
However he warns: “If cryptocurrency prices bounce back, we will probably get another cycle of hype. If they go sideways or the downwards trend continues there will be more out of pocket investors complaining that ‘regulators should have done something’.”
Finally, on the recent moves by Goldman Sachs and the New York Stock Exchange towards Bitcoin futures and swap trades, he warns, “I think it should be obvious to anyone that has paid any attention to the conventional financial sector over the last two decades that if there is money to be made – no matter how dangerous the financial product – someone will plunge in.”
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