The likes of Bitcoin are not dead yet

IS 2018 going to see the rise of the crypto currency or just another New Year fad? “Bitcoin” was worth $1,000 at the start of 2017 and $20,000 near the end of the year.

It then fell back by $5,000 but rose again by a further $2,000 per coin as PayPal founder Peter Thiel increased his investments in it.

A survey by Blockchain found 30 per cent of millennials would rather invest it into crypto currencies than government stocks or bonds.

It begs the question of how crypto currencies works if there is no central bank to guarantee it.

But if someone is prepared to buy it then it has a value, hence crypto currencies rely on peer-to-peer trading to maintain value. That is probably why it is easier to think of crypto currency as an asset class or a commodity rather than as a currency.

Even though there are so many available, they still only form a very small part of the financial market. But like any commodity, as the market place grows and the commodity becomes more liquid, trading also becomes more expansive. Once this happens I am sure we will see a lot more millennials starting to trade in these crypto currencies.

In fact, the New York Stock Exchange is looking to follow other exchanges and list a number of funds linked to Bitcoin, hence once crypto currencies enter the financial lexicon of the mainstream, everyone will be more familiar with terms like “ICOs” (Initial Coin Offerings).

But this could be a doubleedged sword as once crypto currency becomes mainstream, regulators such as the Bank of England will want some say over how they are traded as they are in effect financial instruments. Over 100,000 users per day are purchasing crypto currencies. Thus, the regulator will not want to leave these people exposed.

The other problem with crypto currencies is scalability. Even now some of the exchanges, such as Binance, have closed to new registrations to allow for infrastructure upgrades.

So, interesting times, let us see what the future holds.