Twitter’s chief executive was in London drumming up interest for his pro-crypto payments platform Square (US:SQ), so you could argue that he has a vested interest, although it’s not difficult to appreciate the online commercial potential of a universally accepted crypto-currency, or at least one not prone to the volatility that we’ve witnessed because of the hype surrounding Bitcoin. It’s around nine years since Bitcoin was released in the form of open-source software, but it now competes with a growing number of variants, perhaps most famously Ethereum.
At the time, the concept seemed esoteric in the extreme, and you could have picked up a single unit for the price of a cup of coffee. By midway through last December, the price had rocketed to $19,436 (£13,983) and you could even gain exposure through a new globally traded derivatives product (BTC) on the Chicago Mercantile Exchange. It doesn’t end there; a Goldman Sachs-backed crypto-currency start-up – Circle Internet Financial – recently acquired digital token exchange Poloniex as it aims to build on its position in the market. Meanwhile, the Toronto Stock Exchange has just announced it is partnering with Paycase Financial to launch a brokerage service to provide data and investment advice for investors in crypto-currencies. And even JPMorgan chief Jamie Dimon recently said that he regrets previously calling Bitcoin a fraud, although he also said that he’s still not overly interested in the market.
You might imagine all this confers legitimacy, or perhaps an air of respectability, to the trade in Bitcoin and the like. But it’s perhaps telling that Jack Dorsey’s Twitter, along with stablemates Facebook (US:FB) and Alphabet (US:GOOGL), have decided to ban most forms of advertisements for crypto-currency exchanges and wallet services from their websites. The risks simply outweigh the rewards in a new, unregulated market, especially one inherently vulnerable to fraudulent activity.
Several factors gave rise to Bitcoin; the development of public ledger (or blockchain) technology chief among them. However, you could make the case that central bank monetary policy, above all else, has kept the wind in its sails. The debasement of the dollar through unsustainable borrowing and quantitative easing provided fertile soil for the growth of an alternative means of exchange, particularly one immune to the whims of a central administrator. There is also a school of thought that suggests America’s chief economic rival, China, along with some oil-exporting states (most notably, Iran), are intent on loosening the global influence of the US petrodollar. Whatever is deemed negative for the world’s principal reserve currency is good for physical alternatives – and, so it would seem, the cryptos.
