At the start of the year, few people outside the finance industry knew of bitcoin.
Yet with the crypto climbing 702% this year alone, everyone knows about it now.
There’s no doubt bitcoin has been the big finance story of 2017.
The biggest cryptocurrency kicked off the year at a lowly US$997 (AU$1,318). Last week, bitcoin was just shy of cracking the US$8,000 (AU$10,583) mark.
Its incredible ascent has given rise to a chorus of detractors labelling bitcoin a bubble. But, in my view, bitcoin is only heading in one direction: up.
I’m not the only one who thinks this. Mike Novogratz, a former manager at Fortress Investment Group and investor in cryptocurrencies, believes bitcoin will crack US$10,000 per coin by January. In my view, at this rate, bitcoin could get there before Christmas.
However, as with all things new, we understand that not everyone is a fan.
If you’ve been following the bitcoin story, you’ll know that JPMorgan CEO Jamie Dimon doesn’t like the cryptocurrency. Dimon calls bitcoin a ‘fraud’, suggesting that it’s ‘worse than tulip bulbs’.
Dimon said in September that any trader working for him and investing in bitcoin on behalf of the bank would be sacked for being ‘stupid’.
What’s more, over the weekend, the world’s largest wealth manager joined JPMorgan in airing its disapproval. UBS Group chief investment officer Mark Haefele reckons he won’t put money into any cryptos yet. Haefele says that, due to bitcoin’s lack of government oversight, there’s no way he’d risk client money by buying bitcoin:
‘All it would take would be one terrorist incident in the US funded by bitcoin for the US regulator to much more seriously step in and take action. That’s a risk, an unquantifiable risk, bitcoin has that another currency doesn’t.’
Bitcoin is the banks worst nightmare
The quickest way to end interest in something is to remind people that it killed someone once. But I’m going out on a limb here in saying that perhaps all major currencies have funded the odd terrorist activity… Yet you don’t see any banks calling for the withdrawal of the dollar or euro.
Before buying into banking lies, you have to remember something important: When you take your money out of the financial system and put it into a crypto, the bank loses money.
Removing your wealth from the banking system means lenders have less control of the money supply.
Big, powerful banking institutions might be trashing bitcoin in the hopes that you’ll remain a customer. Yet the link between terrorism and bitcoin is tenuous at best, according to two new reports.
A new National Risk Assessment of Money Laundering and Terrorist Financing report suggests chances are slim that terrorists use cryptos, noting: ‘…digital currencies have only become marginally more mainstream since 2015.’ It also suggests that there’s a serious lack of evidence that terrorists use cryptos. However, the report says that, as more parties accept bitcoin, it increases the chances of money laundering.
Meanwhile, a Royal United Services Institute (RUSI) report suggests that most lone terrorists use student loans, payday loans, welfare benefits and cash to fund terrorist activities. And lone terrorist activities are more common than big, organised ones.
RUSI consultant David Carlisle says that there’s too much attention being placed on bitcoin being used to fund terrorist activities when there’s insufficient evidence at this stage to suggest that.
Carlisle states that terrorists generally have vast ‘financing streams, which show little sign of drying up.’ Furthermore, he says hyping up bitcoin and other cryptocurrencies for terrorist activities is an ‘overreaction [that] could stifle an important new financial technology.’
Yet Carlisle says that this hasn’t stopped governments jumping on the bandwagon and demonising alternative forms of money, noting: ‘Treating cryptocurrencies as an exceptional threat creates the misleading impression that more conventional financial products are not already equally, or more, vulnerable to terrorist exploitation.’
Make no mistake about it; banks want you to fear bitcoin and cryptocurrencies.
Editor, Markets & Money