Disclaimers and disclosures
Despite the provocative nature of this article, we don’t have a particular view on Bitcoin, Ethereum and the various ICO that attract media attention.
While we’re happy to skewer the more pretentious and ridiculous views, we have “strong opinions, loosely held” on cryptocurrencies.
In summary, we
- are bullish on blockchain and its potential to transform a range of transactions; and
- think that securitisation will make cryptos both more secure and less attractive; and
- adopt Buffet’s advice not to buy things we don’t understand.
But we’re always trying to expand our understanding of this sector, so we’d like to share some resources that we find particularly useful.
We appreciate that you’re probably already an expert in crypto, but if you’d struggle to differentiate Bitcoin from Ethereum or think that Mr Okimura invented Bitcoin, these Guides from Upfolio will blow your mind.
They’re engaging, accessible and packed with useful information.
Try them, you won’t be disappointed.
If you’re interested, Upfolio also publish a guide on Blockchain that will help consolidate your already impressive knowledge on the topic.
How Regulation Could Help Cryptocurrencies Grow
This HBR article dated July 17, 2018 by Stephen J. Obie and Mark W. Rasmussen is particularly interesting.
In some respects it’s ironic that an innovation based on decentralised networks and trust mechanisms needs old school regulation to prosper, but it’s a pragmatic reaction to volatility, investor concerns and the inhibiting weight of uncertainty.
We take a similar position and anticipate that, sooner rather than later, ASIC will be regulating cryptocurrency.
[BTW Smart people know the commercial benefits of regulation and compliance]
We’ll acknowledge that we’re predisposed to like finder’s content, but, to be fair, the breadth and depth of their work is impressive.
When we’re not being entertained by their TV episodes, we’re improving our understanding of the cryptocurrencies, wallets and news.
If you want to access a particularly Australian view, and one that combines deep knowledge with wry humour, read any one of Andrew Munro’s articles. His articles cut through the hype to present balanced perspectives on crypto initiatives that are often appealing and ridiculous in equal measure.
The economic limits of Bitcoin and the Blockchain
It may sound like a Soviet Buddy-Comedy from the 90s, but this paper written by Eric Budish from the University of Chicago, is a must read for anyone seriously interested in Bitcoin as an asset class.
It’s not an easy read but Budish drills down into the technology to conclude that there are “intrinsic economic limits to how economically important” Bitcoin can become.
If, or as, Bitcoin becomes a store of value, the disincentives that ensure its (relative) security erode. In basic terms, as the cryptocurrency becomes more valuable, it becomes less secure and therefore less appealing.
Of course, we may be misreading his thesis (and let us know if we are).
download budish’s paper
Are there other resources that might help advisers and compliance experts better understand this emerging area of focus? If you have any suggestions, please let us know (firstname.lastname@example.org)
If you enjoyed this, you may like
- An adviser’s guide to cryptocurrency
- Cryptocurrencies, AML and ‘moral panic’
- Bitcoin, cryptocurrencies and regulation
- Crime, cryptocurrencies and compliance