Big Bang – The past year will become known as the year in which cryptocurrencies damn near exploded or, at least, came into the public domain in a big way. The year-end has seen Wall Street’s approval of the blockchain as an effective and efficient management tool, as well as the arrival of the first crypto futures market: crypto is finally entering mainstream rather than being an instrument of esoteric investment.
Whether 2017 was itself the Big Bang or merely the onset of a super nova event remains to be seen, but the indications are that the financial institutions can no longer ignore the investment potential of cryptocurrencies. While many of the financial pundits continue to talk down crypto, variously as wild speculation, a bubble, or as a Ponzi scheme, a few respected commentators are warning that the world only ignores crypto at its own peril, with total market capitalisation exceeding the GDP of some significant countries. Dawie Roodt, of S. Africa’s Efficiency Group, recently warned that the banks appear to follow the crowd of non-believers and that crypto in general is now too large to ignore while, at least, the leading brands provide examples of solid fiscal management.
This is against the backdrop of the stupendous meltdown of Steinhoff International, a massive retail conglomerate created out of S. Africa: as a result of apparent fraudulent manipulations, the enterprise lost around 90% of its stock market value in a couple of days, taking with it a significant chunk of value from supposedly inviolable national pension funds. At no time has any of the leading cryptocurrencies performed in such a manner as the opportunity for misleading the investor does not exist. What you see is what you get and the value of investment is only governed by supply and demand.
Another backdrop slowly descending onto the stage is that of the Chinese already having a youth culture in which payments are made by cellphones/mobiles, thus bypassing the banking system which is reliant on simple cash flow “over the counter” for profitability. Roodt’s warning on the banks’ ignoring of growth in crypto then becomes all the more significant, with increasing amounts of investment also bypassing the banks to go into crypto. Banks then become increasingly redundant as they provide declining service to fewer customers, thus they will logically fold, collapsing into whence they came not too long ago: bankruptcy will return to its original meaning!
However, the most resounding echoes of the Big Bang concern the inherent privacy of dealings in crypto. No transaction in Dash, for example, is visible to the tax authorities of any country which means that, eventually, as fiat currencies disappear, there will be no tax collection. The logical implication of zero taxes is the inability of any government to govern as it could pay for nothing. It’s all very well not having money to pay for armed forces but public infrastructure becomes unsupportable. Maybe that is another problem for another day: in the meantime, we should sit back, invest in Dash, and watch the universal fireworks display. Are there any seats left at the Restaurant at the End of the Universe?