LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
Traditionally, assets and commodities which have maintained high values regardless of economic and political conditions as well as serving as securities to fall back on in times of uncertainty have been tangible.
Gold has long since held its place as the default chemical element which can be relied upon for its unfaltering value under all conditions, however the future for secure commodities could well be virtual rather than physical according to Bitcoin Foundation Executive Director Jon Matonis.
Mr. Matonis spoke at the Institute of Directors conference at the prestigious Royal Albert Hall in London this week, making the bold statement that Bitcoin is an epic revolution which resembles a similar leap forward to that of the printing press.
“When it clicks, we are going to reach an inflection point and Bitcoin will become the new gold” was Mr. Matonis’ bold claim.
Mr. Matonis is no anarchistic maverick or youthful upstart, indeed quite the contrary. He is a professional, conservatively-dressed industry professional with an extensive career which includes several senior level executive positions within leading-edge business intelligence, software and communications firms across Britain and North America.
One of the early pioneers of the Bitcoin technology industry, Mr. Matonis joined Lydia Group in Salt Lake City, Utah in 2004 as Managing Director, concentrating on investment management and digital payments consulting technology in the areas of bitcoin brokerage, casinos and betting, compliance, cryptography, digital currency exchanges, e-Money research, jurisdiction selection, payment processing, prepaid card programs, and risk management.
Perhaps one of the most understandable reasons as to why Bitcoin may become a commodity which can secure the financial position of many in place of tangibles such as gold is the suggestion by Mr. Matonis that a large proportion of the world is unbanked. Mr. Matonis considers that this could amount to half of the world’s population.
“Those who find themselves in that position can’t even sign up for an online university course because they don’t have a credit card. When they try to better themselves they run into these payment barriers.”
Mr Matonis stated that central banks could regulate people converting Bitcoin to other currencies, but could not currently regulate transactions conducted entirely in Bitcoin. He said users retained the choice to maintain privacy. “Money doesn’t do bad things, people do bad things,” he said, in answer to a question about whether he felt guilt over what could be bought online with the currency. He described Bitcoin as “a non political monetary unit that transcends borders.”
Indeed, the will to remove funds from nations which face fiscal insecurity such as Nigeria, a country subject to stringent sanctions regarding transferring funds overseas due to potential money laundering concerns, or Argentina whose government implemented draconian capital control laws and extremely high foreign exchange charges, has driven certain demand for Bitcoin. Nigerian citizens wishing to conduct business with reputable overseas nations often did so via Liberty Reserve as most firms do not accept transactions from Nigeria, however with the demise of Liberty Reserve and no clear alternative on the horizon, Bitcoin is well placed to serve as a well-recognized read-across for purchasing cross-border services.
In Argentina, Bitcoin has been regarded as the savior of many from the current government’s banning of the US dollar, high government-controlled merchant services charges and a national currency which depreciates with the same momentum as a falling iron girder.
“In five short years Bitcoin has issued 12 million units valued at $6 billion,” stated Mr Matonis. “No other virtual currency has ever done that in the history of modern economics. That demonstrates that we don’t need governments to provide our currency. We don’t need kings to coin our money. The myth of legal tender has been shattered. With apologies to the Chancellor, the emperor has no clothes.”
This line of thinking is clearly apparent to the British government, with Chancellor of the Exchequer George Osborne wishing to encourage Bitcoin technology companies and in a total break with tradition set London out as a Bitcoin center, thus running counter to its standing as a traditional banking center. It is not necessarily in Britain’s interests to embrace a peer-to-peer currency and facilitate ease of establishment of technology firms in London’s populous financial center, as this by nature could become a home-grown competitor to traditional banking and contribute to obsolescence, especially when bearing in mind the national distrust in banks which has risen up in the wake of the 2008 financial crisis and subsequent credit crunch.
Despite London’s prominence as a world center for finance, widespread British sentiment displays a lack of faith in the banking sector, therefore taking the generation of currency into their own hands could be a feasible way of private investors attempting to secure their future.
Mr. Matonis alluded to exactly this point during his speech, resolutely stating that Bitcoin’s success was based on the fact that it was supported by the trust of users rather than the authority of a state. “If we’re honest with ourselves all money is based on faith, all the way from gold to pounds sterling. We accept it and store it because we have a belief that someone else will accept it in transactional trades. If you look at gold less than 5pc is its intrinsic value for gold, for jewellery. The other 95% is its value in monetary exchange.”
With no sign of an improving economy across most of Europe, a dwindling manufacturing sector and ever more dependency on borrowing from an ever-decreasing supply, could it be that the prudent among citizens will generate their very own commodity and secure their own future outside of the tangible, traditional framework? As the long-standing British phrase goes, if you want something done properly, do it yourself.