From Business Life:
Both sides of the (Bit)coin
Is the time right for Jersey and Guernsey to embrace the potential of Bitcoin, or should the islands steer clear for the sake of their financial services industries? Kirsten Morel weighs up the arguments
If it’s the roller coaster rides that get you going at the funfair, it’s likely Bitcoin is your kind of asset class when it comes to investment.
Had you bought, or mined, Bitcoin at the end of 2011, when the cryptocurrency’s value was just above 29 cents, come last November your investment would have gone through the roof, as one Bitcoin became worth just over $1,000.
On the other hand, had you invested at that peak, you would have lost almost half your investment by now – at the time of writing, Bitcoin had fallen to just over $571. Investing in Bitcoin is certainly not for the risk averse, and not just because it’s a volatile commodity but because nobody really understands what drives its value up or down.
Every rise and fall in Bitcoin’s value is followed by a slew of articles and commentators trying to explain why. Ironically, the strongest reason offered for the rising value is the enormous amount of media hype surrounding this digital asset. Yes, people understand there’s a limited supply of Bitcoin and that new coins are generated (mined) at regular intervals. Many also understand that Bitcoin is deflationary, but none of these facts help investors understand why there wasn’t a catastrophic fall in value when Mt Gox, the once dominant Bitcoin exchange, collapsed earlier this year amid various rumours and recriminations.
Given the uncertainty, why would anyone want to put their hard-earned money into such an enigmatic and volatile asset class? Moreover, why is Jersey looking at cryptocurrencies and blockchain technology (the technology that underlies Bitcoin) as a potential source of business for the future?
An oily parallelPreviously:
Looking at the investment potential of Bitcoin, Daniel Masters, Director at Global Advisors, the investment firm that has just launched the world’s first regulated Bitcoin investment fund, compares today’s Bitcoin ecosystem to that of the oil industry 30 years ago.
“During my first 15 years, the oil market was completely fractured, there was little in the way of exchanges and there were multiple company failures and so on. To all intents and purposes, it looked similar to the Bitcoin market we see today.” ...MORE
Headline Of The Day: Blythe Masters' Ex-Husband Launches Offshored Bitcoin Hedge Fund
