There are rough days.
And then there are rough days.
Bitcoin had a bad day. By almost any measure, Thursday (Jan. 11) was a day the crypto bulls would have liked to forget, at least in the trading sense of the word.
Consider $13,100: near the low of trading action and well off the pricing that had been north of $14,800 earlier in the week. The culprit, of course, was one that bedeviled the sector at large – namely, the fact that the South Korean ministry of justice is looking to ban trading of the digital denominations on its own domestic exchanges, which number more than a dozen. Reuters noted that the process could be slow going – perhaps even years – as the National Assembly would have to vote on such a ban.
Raids abounded in that nation, as the largest exchanges in the nation were raided by police and tax agencies, including Coinone and Bithumb, as CNBC.com reported.
As South Korea goes, so go other nations? Maybe and maybe not, as each country has taken its own approach to how the cryptos should be governed – if at all. Across the regulatory landscape, too, Israel said bitcoin is an asset and not a currency, with the nod that it has been difficult to compose regulations. The country also said, through its central bank, that risk lurks for banks and clients. China, of course, has been coming down hard on bitcoin miners this past week, and has said it would “guide” the closing of bitcoin miners through “orderly exits.”
So amid this week’s wild action: 1,500 percent gains (what we saw in 2017) come easily – and partially, they go just as easily. The swings beg the question as to whether this is all a mirage, and whether some oracle can be found who can foretell what is in the offing. One oracle – you may know him as Warren Buffett – has said it will come to a “bad end,” though the timing is uncertain.
And in one bit of irony, the North American Bitcoin Conference said this week that it would no longer accept bitcoin as registration payment, because of “network congestion and manual processing.” Between the lines, this reads that it takes too long and costs too much.
The bad day wound on, but some glimmers of optimism could be found in a Facebook Live event between PayPal CEO Dan Schulman and board member and Xapo CEO Wences Casares. The latter said that “people are paying attention” to cryptos and bitcoin “because it is an interesting experiment.” Should it work out, he continued, “it could change the world,” but added that it could also fail. During the interview, Casares handicapped the chances of the latter at about 20 percent (if holders put up money they cannot afford to lose), and also said there is a “higher than 50 percent chance that this experiment succeeds.”
Should that be the case, time is a key ingredient, noted Casares, and will take several years – give it five to 10. Success means that the economic consequences could be significant; he reiterated his stance that success may mean that a bitcoin could be worth a million dollars.
The spark for Casares’ own initial interest in bitcoin and blockchain? He told Schulman that during his own coming of age in Argentina, he remembered economic hardship and people around him becoming “desperate” – and relayed memories of hyperinflation where his mom carried two plastic bags filled with her salary, and the government confiscated bank assets. Said Casares, bitcoin represented, and still represents, a way for technology to solve these problems. The world where bitcoin succeeds, he said, “is going to be a much better world” than the one that exists today.
Conversing about blockchain, Casares said that it has become fashionable to state that they may be interested in blockchain and not bitcoin – but such sentiment shows ignorance in how the system works, he said. That would be akin, he said, to saying one likes the Web but not the internet. Blockchain, he contended, does not exist without bitcoin.
Previous to blockchain, the level of trust in transactions meant you had to trust the hardware, the software, the location and several other variables – none of which need to be in place with blockchain. And so, he said later in the interview, the use cases can extend beyond the transfer of data.
The time may come, Casares noted, when bitcoin becomes “a global, non-political standard of value.”