ripple ether | Al Zibluk: Just Keeping It Real

Beware Cryptocurrency Gold Rush Mentality

On one hand, it's hard for many investors not to be excited about the meteoric rise of cryptocurrencies in the past few months. Bitcoin has roughly tripled in value since the beginning of the year, Ethereum is up by about 40 times, and Ripple, one of the newest arrivals on the scene, gained a shocking 3800%. What's more, the total market cap for the cryptocurrency industry has been steadily increasing as well, and more and more businesses are finding ways to incorporate digital currencies into their models and payment systems. However, with all of this excitement about the new industry, there are also many analysts approaching with caution. Aberdeen Asset Management is one of the latest firms to do so, suggesting that there is a virtual currency bubble which will, at some point, eventually burst.

Prices Driven By Speculation?

In an interview with Bloomberg, the head of global venture capital at Aberdeen Asset Management had some words of caution for investors considering the cryptocurrency field. Peter Denious said that "prices right now aren't being driven by network usage, they're being driven by speculation that tokens are going to appreciate. It's a gold-rush mentality." Denious and others point to the rapid increase in the number of initial coin offerings, or ICOs, as well as the quick gains in the price of tokens upon listing as two signs that a bubble is in effect. ICOs are tremendously successful, with many companies operating in the blockchain space making millions of dollars in minutes, even if they have no proven or distinctive idea backing their token.

Cryptocurrencies Not the Only Assets to Reach Heights

It may be important to note, however, that digital currencies are not the only assets which have seen gains to record levels in recent months. The returns on the leading cryptocurrencies so far in 2017 have been unparalleled in other areas, but other asset classes have also made impressive gains. Nasdaq and S&P 500 indices are at record levels, despite the widespread uncertainty surrounding global markets. At the same time, housing prices seem to have mostly recovered from an earlier burst.

Coin Telegraph suggests that the increase in asset prices may be due to large degrees of liquidity across global markets, thanks to quantitative easing by many central banks around the world. Considering this possible reason for the gains, it may not be just a cryptocurrency bubble that eventually bursts. If there is, in fact, a burgeoning bubble in either the real estate or equity worlds, those could have serious and long-lasting effects on the worldwide economy. As cryptocurrencies are untested, it's more difficult to say what the impact of a bubble burst would be in that area.

David Ogden
Entrepreneur

Author: Nathan Reiff |

Alan Zibluk Markethive Founding Member

What Do UK Election Results And Brexit Mean For Cryptocurrency Value

The United Kingdom’s Conservative Party failed to secure a clear majority in the UK election on Thursday. The political upheaval surrounding Prime Minister Theresa May sent shockwaves throughout the economy. The New York Times reports London’s position as a “dominant global financial center” could be jeopardized. According to CNBC, by Friday morning the British pound dropped to the lowest value it has had in months: $1.2632.

"The financial markets had almost already priced-in a hard Brexit and will now have to quickly reassess their position,” Nigel Green, CEO of the financial consultancy deVere Group, said in a press release. "As this adjustment takes place we can expect the uncertainty in the financial markets not only to continue but to intensify.” Although the pound is expected to recover, recent developments in London raise questions about the future of global fintech markets. Will the U.K. elections increase growing demand for cryptocurrency like bitcoin?

The pound has long been considered a “safe haven” currency for international investors and people with long-term savings. The London-based founder of BitcoinAfrica.io, Alexander Lielacher, wrote in a blog post that he is optimistic the British government will invest in blockchain as it moves away from the European Union.

“Since the UK government will lose out of tax revenues from its traditional banking sector as banks are moving operations to the Eurozone,” he wrote on the cryptocurrency site BTCmanager. “It is not too far-fetched to think that the government may put more effort into supporting its tech and, more so, the fintech sector.”

The U.K. is one of the few places in the world with a regulatory fintech “sandbox,” a nimble legal structure that is particularly advantageous for blockchain businesses. “The party that can protect the fintech industry is one that can negotiate a Brexit that causes the least amount of damage to the UK financial services and technology industries,” British fintech expert Elizabeth Lumley told Forbes before the election.

Plus, even bad news for the pound could be good news for cryptocurrencies like bitcoin and ether. The Telegraph reported Hargreaves Lansdown, the U.K.’s largest online trading platform, will soon let customers invest in bitcoin. Meanwhile, Coinfirm, a blockchain compliance and analytics platform based in London, told International Business Times the British company is currently working on a partnership with the American company CSI Capital Management to support blockchain assets and cryptocurrency investments. An uptick in British customers with bitcoin pensions could set a precedent for international blockchain pensions.

The number one reason why cryptocurrencies and blockchain technology aren’t widely adopted yet is because of confusion over regulatory standards. Coinfirm aims to provide a standardized and blockchain agnostic platform, which means it is integrable and technically compatible with everything from bitcoin to Ethereum, Dash and Ripple. “Brexit smexit,” the startup’s CMO Grant Blaisdell told IBT over Skype. “It’s only going to add fuel to it. Any time there is instability it’s going to add more fuel and more reasons to back this [blockchain] ecosystem.”

It’s too soon to say how British politics will impact the global demand for cryptocurrencies. But people like Coinfirm’s CEO, Pawel Kuskowski, don’t appear concerned the shift in British politics will undermine their regulatory safe haven, at least not the fintech ecosystem. Kuskowski told IBT in an email that London will continue to reign as the global capital of the blockchain ecosystem. Brexit or moves towards isolation may drive traditional banking institutions away, but it could also increase the flexibility and strength of the U.K.'s regulatory independence.

"The British pound will be always connected to the performance of the economy," Kuskowski's statement said. "Institutions may find solutions for international transfer of funds and commerce using blockchain and cryptocurrencies. This something that has to be seriously explored as blockchain could provide a serious benefit in a time like this for the U.K."

Article by Leigh Cuen

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member