Are you a Bitcoin believer?
Many people swear they have made oodles of money investing in Bitcoin, the biggest and most popular crypto-currency. After all, it was valued at US$1,000 at the start of 2017 and shot through the roof at close to US$20,000 by December.
Most recently, however, it dropped to US$7,300 and analysts look at a bottom rate of US$6,800 before any significant buyer interest can be enthused once again.
Believers deal with Bitcoin for two reasons: (a) faster and cheaper way to make payments and (b) for investment since only a maximum of 21 million Bitcoins will be "mined" amid an ever-increasing awareness of people of it – necessitating an inevitable rise in its price.
However, there are famous nonbelievers. One is Warren Buffett, one of the world's richest whose Berkshire Hathaway had grown robust (US$ 83billion value) on a "buy and hold" strategy on stocks and real estate aimed for the long-term yield. Buffett had always been an apostle of "Intrinsic Value" says Bitcoin is a "non-productive asset that produces nothing" unlike stocks and real estate.
Bill Gates, on the other hand, essentially says the same. Bitcoin investment is a "greater fool theory" where purchasing decision is based solely on the hope that the next dude will buy it at a higher price than what he did.
Being such, one should not tinker with it using grocery money and amortization money for obligations. One associate says it is foolish to anchor one's future payment for a fixed and known obligation on a fund source with violent fluctuations in value.
Governments had been wary that being unregulated Bitcoin and other crypto-currencies could be used to launder money from criminal activities and for terrorist financing since most deals are under the radar.
Melchor Plabasan, BSP Deputy Director for Core IT Specialist Group in a forum titled "Cryptocurrency Decrypted" said basically it is "caveat emptor" - or buyer beware – for Bitcoin investment because in the Philippines it is unregulated. What we regulate somewhat like Japan and Singapore are the converters or exchangers of fiat to crypto-currencies.
It appears only the USA and Canada have firm frameworks on Bitcoin regulation while nations like China, South Korea, Indonesia, and India ban their financial institutions from dealing with the subject.
Players in the industry have cautioned people not to mistake Bitcoin with Block Chain technology - one for the other. Block Chain is taking off the ground due to its numerous sound application as a technological breakthrough.
Luis Pineda, President, and Chairman of IBM Philippines said that the technology is also a vote for the environment. For instance, he says the cost of global trade using paper is US$1.3 trillion. Walmart and Maersk (shipping company) are substituting technology for paper transactions and so are humongous government documents for smart contracts,
Imagine further what this technology can do in getting rid of plastics used to facilitate transactions and identification methods. Without the arrest of plastic usage, it is bruited that by 2050, there will be more "plastics than fish in the oceans."
Plabasan mentioned there are applications of technology that are helping financial inclusion and efficiency in the delivery of financial services and trade.
One cited is the RCBCC E-Peso. Others like Ripple make cross-border payments in real time compared to traditional payment mechanisms like Swift (5 days) and Unionbank's technology of linking Rural Banks not yet tied with Bancnet and such allowing payment transfers to farmers in the rural areas to pay for their supply purchases.
Finally, a biometric-based Digital identity is in the works to make financial inclusion a reality to many who do not have any bank records, according to the BSP.
Technology like the Block Chain, indeed, is rising at a fast clip. But Bitcoins, to this day, though gaining popularity exponentially apparently does not hold as much promise in terms of future stability and unerring reliability.
(Bingo Dejaresco, a former banker, is a financial consultant, media practitioner, and book author. He is a Life Member and Chair of Broadcast Media of Finex. His views here, however, are personal and do not necessarily reflect those of Finex. dejareescobingo@yahoo.com).