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The Crypto Investor Is Changing | Micky.com.au

Originally published in Micky

Statistics show professional investors are coming to crypto by Dr. Prash P, CEO Caleb and Brown

Over the past twelve months, my cryptocurrency brokerage service, Caleb and Brown, has seen a notable shift in the type of client entering the crypto market.

The stratospheric highs of January 2017 saw a huge influx of speculative investors, including many who were making their first notable investment. These investors were reacting to hype driven by friends and family, as well as the media, which enthusiastically reported about the rise of cryptocurrencies as a financial force that could not be ignored.

The shift

Reporting in recent times has turned. The last six months has seen repeated public tolling of the death knell for cryptocurrencies, and the market has not put up any credible resistance either, with a slow (by crypto standards at least) decline across the last nine months.

There have been spikes of short lived volatility, but that has only served as a distraction while the general trend has continued.

The decline of the ICO wave, which likely artificially inflated the Crypto market in early 2018, has seen Bitcoin’s market dominance rise from as low as 32%, back to above 50%.

New investors

With this backdrop though, it has been curious to see a new, more risk averse investor start to appear.

Superannuation and pension funds, investments via trust structures and Limited Liability Companies (LLCs) have taken over from individual accounts as the majority of new clients of our brokerage in the last six months.

A snapshot of our investing population suggests that these new investors are investing in Bitcoin as a long term hold rather than seeking rapid turn-around gains like their speculative counterparts did.

This is exactly what we saw in 2014 – euphoria led to new investors which developed into
fundamental believers as the price corrected.

Follow the money

Financial markets are not isolated systems, and a look at the greater financial markets reveals some interesting current trends.

Both the S&P 500 and Dow Jones Industrial Average are down 7% for the year, and the NASDAQ Composite Index is down 18% in the last 3 months. The UK’s FTSE 100 is facing a 12% loss for the year, its worst in a decade. Back in Australia, the ASX 200 fell almost 7% this year, losing investors $120 Billion.

Meanwhile in crypto land, markets experienced a late Christmas rally with BTC bouncing back from a December low of US$3200 to rise to more than US$4200 in the last week before settling to about US$3800. Whether this will be sustained is too early to tell but it does raise some interesting hypotheses, not all new.

Crypto as a hedge

It has long been proposed that cryptocurrencies, as a non-correlated asset class, could prove a useful hedge against traditional financial market risk in the way Gold or Fine Art have acted in the past.

A late price rally could indicate a shift of value from traditional financial markets, bringing
some credibility to this idea. While this idea requires a significant financial downturn to be really tested, there are some changes in the demography of new investors to our brokerage which could also hint at change.

The last three months have seen an unprecedented increase in what we may generously term as savvy investors. Financial advisors, stockbrokers and venture capitalists investing into their personal portfolios now make up more than five per cent of Caleb & Brown’s client base, up from two per cent during our last audit in September. Equally their average initial capital investment is more than three times our client average.

Higher disposable incomes in this demographic could account for this increase, but that shouldn’t take away from the fact that the financial incumbents, traditionally thought to be shy of this emerging asset class, are seeing it as a viable investment alternative.

What’s next?

Baron Rothschild famously said, “Buy when there’s blood on the streets, even if it’s your own blood”. If it is this blood that the money-people are sniffing and hunting down leading them to enter the crypto market, then it bodes well for this trend to continue.

2019 looks to be an altogether different proposition for Crypto markets than 2018, with a very different outlook, market position and general sentiment.

While that sentiment globally remains cautious, the gradual shift we are noticing in investor trends fills me with confidence that the market is moving in the right direction, albeit gradually.

Dr. Prash is the CEO at Caleb and Brown, which 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.

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Custody Seen as Crypto’s Next Major Battleground

Report published by Waters Technology

Dr. Prash, CEO Caleb and Brown contributes to “Custody Seen as Crypto’s Next Major Battleground” By Wei-Shen Wong – Waters Technology.

 
Although institutional interest in cryptocurrency trading has grown, the development of the custody space, in particular, is crucial for its next phase of evolution.

Custody Seen as Crypto’s Next Major Battleground

To Prash Puspanathan, founder and CEO at Caleb and Brown, an Australian-based boutique consultancy firm providing cryptocurrency services, the two primary barriers that impede greater institutional investment are a lack of regulatory oversight and trust.

“It is the latter of these factors, trust, where technology can play a huge part in cementing. The lack of a comprehensive, secure and trusted custodial solution for digital assets which allows institutional investors who need to be considerably more risk-averse to be assured that their assets will not disappear off the balance sheet due to security factors out of their control needs to be addressed. And it is being addressed,” he says.

This is through the development of innovative solutions for secure custody from multi-signature wallets, to sharded private keys, to analog thumb-printing of hardware wallets, combined with secure vault storage.

“However, it is only when we achieve dependable underwriting of these assets that we will be able to justifiably state that a custodial solution worthy of institutional reputational risk exists,” Prash says.

The lack of a comprehensive, secure and trusted custodial solution for digital assets… needs to be addressed. And it is being addressed — Prash Puspanathan, Caleb & Brown.

Access the FULL REPORT – here

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: Waters Technology

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Cryptocurrency Market Insights – Q3 2018

Report published by CoinJar

Dr. Prash, CEO Caleb and Brown contributes to Cryptocurrency Market Insights Q3 2018 brought to you by CoinJar.

 
Summary: The last quarter proved wild for short-term speculative investors with BTC at $8,356 on June 30 rising to $11,709 on July 25th and tumbling to $9,284 by September 30th. Based on those prices if you had held BTC for the quarter you would have seen gains of 11.10%. Comparatively, if you had entered the bull run in September 2017 at $6,581 returns would be in excess of 39%

Market Volume – What are your current estimates on AUD or Australia market volumes (inclusive of OTC)? What changes have you seen in the last 12 months?
This is a difficult approximation to make, as the OTC market is largely opaque. And this is particularly relevant as we are seeing a shift towards greater volume being put through the OTC desks in preference over exchanges. This is likely a combination of continuing fluctuating confidence in exchanges as well as the investing population calling out for a more secure and reliable process.

Price – What (if any) price indication are you currently providing clients?

Where do you view price direction for the next 3 v 12 months? Where do you think sentiment sits across the market (bullish or bearish)? 60-day price volatility on Bitcoin is down to just 4%, which we haven’t seen for two years, since October 2016. Significantly lower than the 42% peak in February this year.

Volatility – How do you view market volatility at present? How would you compare that to 12 months ago?

Bitcoin is very much a social phenomenon, which tends to be a trending topic as families and friends gather over the holidays in Q4 each year. As a 3 month estimate, we anticipate that there’s a good chance of reaching $7400 USD, while the 12-month price direction is less clear as general sentiment is still bearish.

OTC – How do you see this market currently? Who are the major participants? How has it changed in the last 12 months?

OTC changed from very crypto-savvy people who used OTC to achieve better pricing and access to liquidity to a range of demographics who are now using OTC for better customer service and assurance around exit strategies.

Industry – How do you see the next 12 months within the industry?

What trends are you noticing in particular around products & application development? What’s your personal sentiment on this space? We are anticipating that a lot of the pain points in the industry will start to get solved, particularly around custody, and that will subsequently enable further developments in the regulated financial sectors.

Business & Products – How has your business changed in the last 12 months? I.e. have you introduced specific new products or changes to current products, how much was that influenced by the market?

We have seen extraordinary client number growth, including a large number of international clients. A key service offering we are seeing greater demand for us is Crypto Tax Consultancy due to greater recognition of the need to be compliant with the ATO’s directions on Crypto trades as Capital Gain events.

Download the FULL REPORT – here

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: CoinJar

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Top Cryptocurrencies Performance Summary – Coincast TV | Episode 1 – 11

Originally published in Multiplier Crypto Business News

Over the past 11 Weeks (Week 12, Season Finale is let to be aired at the time of this report), Caleb and Brown have been providing their trading insights and expertise to Coincast TV as a part of – Top cryptocurrencies of the week.

Through our experience in crypto assets management, we decided to pick what we thought were the best buys of that week and put our money where our mouth is — on public television.

Reviewing the overall market performance, we have seen on a seven-day exist trading strategy we have seen an overall trading increase of 123 percent across nine trades.

What is most interesting is that this has not just outperformed the market but has broken the bearish trend which has been seen across the crypto market. The global crypto market has slid by US$45 billion during the same period resulting in an 18 percent decrease in performance across the board and a 21 percent decrease across the top 20 coins.

When looking across all trades, it is worth recognising the worst performing trade was ETH which saw a decrease of 15 percent over the week since spotlight by Coincast TV.

What we have seen is that the worst performing trade was still above the global market average.

In other words, it wasn’t one trade which outperformed the market, but every trade with risk considered in the trading strategy along upside.

With a 131 percent above-market performance, we hope to demonstrate Caleb and Brown, with over 30 years in combined crypto trading have the expertise and strategies to buck the trend.

Caleb and Brown’s Spotlight Cryptocurrencies

Performance Overview:

 

How did we do compare to Global Index?

Note: Information as of 18 October 2018.
Disclaimer: The information herein is not intended as legal, financial or investment advice and should not be construed or relied on as such. No material contained herein should be construed or relied upon as providing recommendations in relation to any legal or financial product.

Whether you are new to the market, or a seasoned trader, Caleb & Brown can help to realise your goals. Call us on +61 1800 849 149  or Contact Us to discuss further.

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Image source: Coincast News and Multiplier – Crypto Business News

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Why Bitcoin and Crypto Have No Future

Originally published in Think Outside the Blox, Medium

Why Bitcoin and Crypto Have No Future

A popular post on social media over the past week lists out some of the major events/announcements in Crypto space. Taking a light-hearted sarcastic jab at the naysayers.

And, Here We Go!

  • when the NYSE is creating the cryptocurrency trading platform Bakkt in collaboration with Microsoft and Starbucks with physically backed Bitcoin futures contracts.
  • when Fidelity is offering it to its clients and has been mining it since 2015.
  • when Steve Wozniak is co-founding a cryptoasset investment firm.
  • when Katy Perry IG’d this!

  • when Brendan Eich, creator of JavaScript and Mozilla, started Brave Browser with a built-in ad-blocker and Basic Attention Token (BAT) to reward content creators.
  • when Amazon Web Services partnered with QTUM.
  • when the Bill & Melinda Gates Foundation is utilizing Ripple’s interledger protocol to help with payment services for the financially impoverished and unbanked.
  • when IBM is partnering with Stellar Lumens (XLM) for cross-border payment solutions.
  • when Jamie Dimon, tells all that it Bitcoin is a “fraud” and that if he catches any employees who own it he would fire them, while in the background JP Morgan and Morgan Stanley bought Bitcoin ETNs on the dip.
  • when the MLB is launching a crypto-based game on the blockchain using the ERC-721 standard for non-fungible tokens.

  • when George Soros initially bashed cryptocurrencies, only to later buy a stack of Bitcoin at the $6k low.
  • when Alibaba and IBM have the most blockchain patents in the world.
  • when Yale’s endowment invested $400 million in cyptoasset funds.
  • when the Winklevoss twins took $11 million of their Facebook money and put it into Bitcoin in 2013 when it was $120 each.

Should I go on?

Yeah. This has no future.

Accumulate, HODL, and think outside the blox!

Whether you are new to the market, or a seasoned trader, Caleb & Brown can help to realise your goals. Call us on +61 1800 849 149  or Contact Us to discuss further.

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Image source: Think Outside the Blox

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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

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The Future of Crypto Assets and Blockchain

Dr Prash Puspanathan CEO, Caleb and Brown on #Coincast TV | Sky News Business

First came the millennials, then the first tech-savvy adopters, but when will financial services finally take the plunge into crypto?
Dr. Prash speaks to Coincast TV reporter Heidi Cuthbert about the future of Crypto Assets and Blockchain.

Interview Transcripts:

1. The first wave ofcrypto assetsinto cryptoassets has been young tech-savvy millenials, who’s the second wave going to be?

I think we are firmly in the 2nd wave now. There is a commonly talked about S-curve of adoption staring with innovators, probably the tech savvy millennials you brought up right at the outset. Then come the early adopters which is probably what we are seeing now. Running a brokerage, I have the luxury of an intimate insight into investor demographics and it is heartening to see that there really isn’t a typical one. Our oldest investor is 75, we are gradually seeing an increase in female investors which is something the industry still lacks, the diversity is promising for the market as a whole.

The third wave, almost counter-intuitively, appears likely to be the financial services industry. We already seeing big moves by large institutional players globally which is forging the path and as regulation moves gradually towards Cryptocurrencies becoming a regulated financial instrument, I expect to see Wealth managers and financial advisors who are currently constrained by its unregulated nature being able to invest into this market. However, that will only come with greater oversight, improved custodial solutions and greater adoption and usage of Crypto.

But, baby steps.

2. Why is holding crypto better than holding cash?

I guess this is first best qualified by asking another question, which is “Who’s asking?”

If you are a Syrian refugee trying to flee across a border, then Crypto is definitely a more portable asset than a bag of cash
If you live in Venezuela where hyperinflation has made your local currency a worthless store of value, then yes

But if you are asking from the perspective of a developed world investor in a stable economy, government and political climate such as we are in, then perhaps one of the main value propositions of Crypto is its capacity to act as a Non-correlated asset as compared to any Fiat currency markets. Whether or not you believe that the next global financial downturn is imminent, inevitable or likely, Cryptocurrencies allow investors the opportunity to diversify their portfolios by acting as a hedge against Fiat market risk.

3. There are over 1700 different Cryptocurrencies out there. What do you think the future of all of these will be?

I expect that the future will see a consolidation, and a dramatic one at that, of the different coins out there with a narrowing down to a few select categories, broad use-case scenarios.

Specific coins which hold the mantle of both market share and value proposition within those categories will likely garner market share from the rest and establish themselves as the sole primary currency for that broader purpose.

To compensate, infrastructure that is built around the current multiple different coins will adapt to make themselves malleable enough to work with the reduced specificity of the eventual coin that is used for their industry or purpose.
This would lead to a situation more analogous to the current currency landscape.

4. How can investors manage the extreme volatility of crypto assets?

The short answer is…with difficulty.

Look Crypto markets are going to be inevitably volatile, a reflection of the small market capital and just how early on we are in the cycle of adoption. The total market capital of Bitcoin is only $200Billion. In comparison, the market capital of Gold is $7 trillion. So any event geopolitical, economic, local or international that causes market fluctuations which would cause barely a ripple in the depth of the fiat currency market is likely to be reflected by shifts in the Crypto market. It’s like throwing a pebble into the ocean vs into your bathtub.

To minimise volatility, investing in the currencies with a larger market capital, that have been around for longer and have a more stable architecture and infrastructure around them and not chasing the ludicrous 100x gains from newer, speculative coins is probably the most sensible strategy I can recommend alongside having a diversified Crypto portfolio. It’s one of the key lessons we educate our clients on.

5. What’s the future of blockchain – is it bigger than the internet?

The internet was arguably the greatest revolution in the way society operates, relates to each other and functions. Ever.
Comparisons have been made suggesting that “Blockchain technology” in all its iterations may eclipse that.
I think the greatest promise though lies in the confluence of almost mind-bendingly revolutionary technologies that we sit on the cusp of, the synergy of which would mean a sum that is exponentially greater than its parts.
Blockchain technology, Cryptocurrencies, Artificial Intelligence, VR technology, renewable energy, Quantum Computing.

We are heading into a time of the greatest ideological and functional change the world has ever seen, led by technology. But more than the volume of change, the rate of change has never been higher than it is now. And crucially the acceleration of change: The rate of change of the rate of change is what truly gives me goosebumps and I’m glad to be alive and part of this.

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.

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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

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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