Caleb & Brown No Comments

ASIC Tightening Regulation On ICOs

Originally published in Dynamics Business

ASIC tightening regulation on ICOs is a positive move for the industry by Dr. Prash P, CEO Caleb and Brown

ASIC recently announced that it has shut down several Initial Coin Offerings (ICOs) for misleading or deceptive statements in their marketing and operation of unlicensed managed investment schemes. This once again casts the spotlight on the unregulated nature of the Cryptocurrency industry and the need for investor protection.

Dr. Prash @ Real Big Things.
Dr. Prash P CEO, Caleb and Brown on Dynamic Business.

Cryptocurrencies and, by association with the larger category of digital assets that they enable and are often confused with, continue to be viewed with suspicion by much of the mainstream public. This is despite, or in some cases as a result of, their explosion into the public consciousness in the last year. The reasons for this are varied.

The early association with nefarious activity has probably cast the darkest and most dogged shadow, one which continues to plague its legacy despite that being increasingly a historical issue. A 2018 Bloomberg report states that criminal activity accounts for only 10% of Bitcoin transactions. In contrast, a study by The United Nations Office on Drugs and Crime (UNODC in 2009 estimated that criminal activity amounted to 3.6% of Global GDP with 1.6 Trillion USD of that being laundered. It is worth noting that the entire market capital of all Cryptocurrencies currently is only about $200 Billion USD.

The very rapid rise in Cryptocurrency prices at the end of 2017 and then a very dramatic slump which has persisted across 2018 raised new concerns. That 75% drop in the total market capital compared to its peak at the start of the year, catalysed by speculative investors panic selling or exiting the market after making quick gains, had significant ramifications for confidence in the industry. Investors who got in at the crest of the wave made huge losses, the dramatic dip intensified talk of the industry being a “bubble” and the financial services industry saw further reason to shy away. Those in the industry though, will point to the fact that it was speculative investment and not the underlying technology that should be held culpable and the small market capitalisation which makes it so vulnerable to volatility. In addition, this industry remains very much in its infancy and as such lacking the solid foundations which would allow for a quick bounce back. For context, on the 26th of July this year, Facebook lost $119 Billion USD in a single day without similar rhetoric following it.

And then there have been scams capitalising on the anonymity the industry offers, hacks preying on the infancy of the infrastructure built around the technology, and the murmurings of market manipulation. All issues of concern but again not deficits of the technology itself but of the ecosystem building itself around it.

However, a more pertinent and relevant reason for oversight of this space has been the rampant and long unregulated rise of the ICO phenomenon. Initial Coin Offerings, the Cryptocurrency equivalent of Initial Public Offerings, grew in prominence in 2017 as projects raised huge sums of money based in some cases on little more than a whitepaper and an idea. The unregulated nature of this market reduced the impedance to capital rising by allowing crowd sourcing of capital as well as allowing it to ride on the coat-tails of a technology that showed the promise to revolutionise the way industries and business would operate.

Much of that promise remains valid. The technology underpinning many of these ICO projects, as well as the innovations they bring to the fore, are likely to continue to develop and cement their place in the future. The capital raise model pioneered by ICOs, based on decentralisation and the efficiency of smart contracts will likely evolve into a model that the future of business will be built on.

However, the potential of these technologies and innovations are likely to be curtailed by rogue projects without appropriate investor protections and/or individuals seeking to capitalise on the promise of the industry to raise capital for unvalidated ventures. This would be damaging to market sentiment to an extent that it would hamper the growth of the industry.

The industry then, rather than view the greater scrutiny by ASIC with pessimism, should instead welcome the move as a means of separating the wheat from the chaff, with a long term view towards increased legitimacy within a young, growing movement. These are but the early steps on the long road towards assimilation with, and adoption by, the greater financial services industry.

Dr. Prash is the CEO at Caleb and Brown is available to guide new and seasoned investors.

About Dr. Prash P:
Prash is considered a thought leader in the philosophical and existential implications of this emerging technology and is a regular speaker at industry conferences.

connect with us

Call Dr. Prash on +61 1800 849 149  or Contact Us to discuss further.

Image source: Dynamic Business

Caleb & Brown No Comments

Reconsidering The Environmental Impact Of Cryptocurrencies

Originally published in Dynamics Business

Reconsidering The Environmental Impact Of Cryptocurrencies by Dr. Prash P, CEO Caleb and Brown

The speculative market’s obsession with the dollar value of Bitcoin and its Cryptocurrency cousins has acted as an unfortunately effective smokescreen; One that has obscured the fact that beyond being just an emerging asset class, Cryptocurrencies are, at their core, an emerging technology.

And as with any emerging technology that finds value propositions beyond its most obvious initial purpose, so too does it pose potential issues of concern not readily solved in the present paradigm. One of the more glaring of the latter is that of the energy demands of the technology.

That the technology underlying Cryptocurrencies has a tremendous energy appetite is undeniable. Cryptocurrency mining ( the process underpinning numerous blockchains ) requires enormous computational power and electricity. According to Diginomist’s Bitcoin Energy Consumption Index, Bitcoin itself has an estimated annual electricity consumption of over 73TWh, roughly the energy consumption of Austria. While these numbers may sound alarming, it is worth noting that as the price, market capital and adoption of the industry increase and Cryptocurrency mining becomes more profitable and appealing, this figure looks set to rise.

Image courtesy Dynamic Business

So what does this mean for an industry that has built itself on Libertarian principles but looks to flout the environmentalist persuasions of the liberal Left?

The pessimist’s view would be, as it appears on face value, that this industry is non-sustainable; that these energy demands make for an industry that goes against the view of the future that most progressive thinkers and policymakers aspire towards. Surely, advocating for a technology that looks to drive a positive feedback loop of energy usage driving adoption which incentivises for greater energy use is incompatible with the Futurist’s aim for a greater balance in humanity’s consumption demands.

Conversely and perhaps controversially, I offer an optimistic alternative viewpoint.

The Renewable Electricity Futures Study, perhaps the most comprehensive study into renewable energy projections in the United States, has revealed that the U.S. has the capacity to generate 80% of its electricity from renewable energy sources by 2050. This is not to suggest that it is on track to, for it most certainly isn’t if current energy policies were to hold; Rather that we possess both the technological, intellectual and functional capacity to achieve this if the policy were to align and enable this.

Without treading into the murky waters of conspiracy theory, questions as to why this misalignment exist often point towards the lack of incentives towards this new direction. More pertinently, they point towards the financial incentives inherent in maintaining the status quo and the influence of this on policy.

So if the technology, know-how, and capacity to drive a renewable energy future are waiting in the wings, could Cryptocurrencies and the significant economic benefit that awaits anyone who manages to create a sustainable pipeline that drives this forward, be the incentivising factor necessary to power this change?

Could a Bitcoin be the metaphorical pot of gold at the end of the sustainable energy rainbow?

The reality will, naturally, sit somewhere between these two viewpoints, each on polar ends of the dispositional spectrum.

Regardless, as we look past the dollar value of this market, this will likely emerge as a discussion of considerable significance in the future of this industry.

As the smoke clears.

Dr. Prash is the CEO at Caleb and Brown is available to guide new and seasoned investors.

About Dr. Prash P:
Prash is considered a thought leader in the philosophical and existential implications of this emerging technology and is a regular speaker at industry conferences.

connect with us

Call Dr. Prash on +61 1800 849 149  or Contact Us to discuss further.

Image source: Mashable

Caleb & Brown No Comments

The Future Of Cryptocurrencies

Originally published in Dynamics Business

The Future Of Cryptocurrencies: Look Past The Sec And To The Developing World by Dr. Prash P, CEO Caleb and Brown

This last fortnight has seen a slight resurgence in the price of bitcoin and with it, the entire Cryptocurrency market as a whole. Market sentiment moving past the noise of the SEC’s ETF rejection to which it has been so emotionally pegged is a likely factor, which is reflected in this price rise. However, this focus of speculation being principally centered around major financial markets, powerful industry players and regulators has ignored a very large portion of the future for this industry; The developing world.

Dr. Prash @ Real Big Things.
Dr. Prash P CEO, Caleb and Brown speaking @ Real Big Things.

Developing world markets have time and again demonstrated themselves to be fallible to dictatorial governments, frequent feudal power struggles, volatile economic structures and civil unrest, all of which contribute to an unstable economic landscape. While not limited to, a common result of this cocktail has been hyperinflation and a lack of faith from the populace in the national currency. As a recent case study, we can consider the case of Venezuela.

The Venezuelan Bolivar’s inflation rate reached 83,000% in July and is projected to hit an astronomical 1,000,000% by the end of 2018; figures which start to lose meaning after that many zeros. The real-life result of that is a populace that is desperately seeking a means to stabilise the value of their assets and savings that their own currency is no longer able to provide. The Sydney Morning Herald reports – Inflation desperation: Venezuela to cut five zeros from currency.

Enter Bitcoin. An asset class with a mathematically prescribed inflation schedule and finite supply that can never be hyperinflated. Bitcoin’s capacity to act as a store of value while also possessing the capacity to be a means of exchange has seen Venezuelans taking to the Cryptocurrency market to protect themselves from their own failing economy.

In addition, of what was it’s 32.4 million population in 2014, more than 2 million people have left the country since taking with them whatever assets they can. With the Venezuelan government banning its citizens from owning US Dollars (long considered the closest to a globally accepted currency), Venezuelans are instead investing in Cryptocurrencies as an asset that cannot be seized and functions across borders.

While this is a current example, the idea of developing world populations turning to alternative currencies than their own to stabilise their personal finances is not a new phenomenon. M-pesa, mobile phone credit that could be traded between individuals via rudimentary mobile phones saw widespread adoption throughout the African continent with Kanya leading the way. By the end of 2011, the M-Pesa network has 17million registered users. Over the course of 2014, the transactions in M-pesa for the year amounted to almost half the value of Kenya’s GDP.

It is with some humility that us in Developed World markets who sit and ruminate on the potential for Cryptocurrencies to act as a hedge against Fiat currency markets and ponder their potential in the case of destabilisation of financial markets, could take away some lessons from. A primitive decentralised economy is borne out of necessity and imagination which is replicating itself in unstable financial markets around the world.

The decisions of the SEC, major banks and regulators may decide the short to medium term uptake of Cryptocurrencies as well as the resultant market sentiment that drives immediate price movement. However, with the United Nations predicting that by 2030, 85% of the global population would be in developing world countries, we would be foolish to ignore the potential economic implications of a market that large and with such a viable use case for Cryptocurrencies.

Dr. Prash is the CEO at Caleb and Brown is available to guide new and seasoned investors.

About Dr. Prash P:
Prash is considered a thought leader in the philosophical and existential implications of this emerging technology and is a regular speaker at industry conferences.

connect with us

Call Dr. Prash on +61 1800 849 149  or Contact Us to discuss further.

Image source: Dynamic Business