Investors in bitcoin and other cryptocurrencies have enjoyed an unusual run, but now they are concerned that the arrival of Janet Yellen as US Treasury Secretary could lead to a hostility from regulators and central banks. There is talk of a new age, which is why booster is called digital money independently.
In her last press conference as chair of the Federal Reserve in 2017, Ms. Yellen said the bitcoin was a “highly speculative asset” and “not a stable store of value.” These dismissals were echoed by many other government officials at the time. Since then, however, the market value of the bitcoin has almost doubled. Digital currencies are here to stay.
In the first crypto frenzy of 2017-18, comedian John Oliver described Bitcoin as “everything you don’t understand about computers, you don’t understand about money.” Aspects of technology, especially the blockchain network of digital ledgers used to record transactions, did not really survive until the initial hype, but they are evolving. The bn 20bn launch of the “initial coin offer” seems to contain elements of a speculation bubble, but the funds raised are now needed to launch large projects like other IT projects in Silicon Valley. Being used.
Jay Clayton’s recent departure from the chair of the US Securities and Exchange Commission could lead to less adversarial regulatory scrutiny of these activities, especially if he is replaced by Gary Jensner, who teaches digital currencies.
However, resistance to payment and transfer vehicles as digital currencies remains. Due in part to higher transaction costs, the bitcoin is not used for large-scale payments, and its future role seems limited.
Outgoing Treasury Secretary Steven Manuchehr is working on new regulations to increase transparency in bitcoin transfers and reduce money laundering. Ms. Yellen, in conjunction with the Fed, will adopt an even more conservative approach, making the payment system a public good.
The Fed is cooperating with its foreign counterparts in investigating the development of digital currencies. It is almost certain that CBDCs will eventually be released into the larger realm after China’s lead. However, they will be kept in national currencies, not in cryptocurrencies.
Private competitors will actually be more systematically or actively discouraged in new currencies, such as bitcoins. Hybrid stable coins, such as Facebook’s library, which are attached to a single currency or other real assets could be welcomed by central banks if they were to be transferred directly to traditional currencies. Moreover, they do not have power through blockchain. Each central bank can develop its own distributed ledger technology.
It still leaves a role for the corrupt as an investment vehicle and a store of value. Can Bitcoin seriously compete with gold as a safe asset for the biggest investors? History, rules and market fluctuations may seem impossible, but it has begun to play a more important role.
Many large hedge funds and some traditional asset managers have followed Paul Tudor Jones in accepting bitcoin as a core hedge against inflation.
While this may sound appealing when the central bank was making money by buying government loans last year, there are few signs of inflation on the horizon.
Yet bitcoin prices continue to rise, apparently driven by a myth that a privately created asset, which in theory is a limited supply, resembles “inherited” fighting currencies. Cannot “print”.
According to the Gold Hub, at the end of 2019, the amount of gold reserves held above the ground was 198,000 tons, of which about 57,000 tons were proven underground. The total stock price will be about 17 tons at today’s prices. The latest market value of the bitcoin is about .6 0.6tn – bitcoin bulls see it as a price to see how much it could rise further.
There seems to be no less reason on the basis of monetary policy or financial stability as regulators should be concerned about cryptocurrencies competing for gold as a reserve of value.
The crypto world is currently obsessed with short-term speculation. However, if investors continue to buy the dubious statement that these private currencies are “safe” from the control of central banks, they may increase market value significantly in the years to come.
Foreign things have definitely happened in the financial markets.
Financial Times Limited 2021