Bitcoin Between Fear and Frenzy

With the surge in early January of Bitcoin rate, the gap is widening between cryptos-skeptics and the crypto community who does not doubt of this technology or the intrinsic value of this token. Because, let’s remind it, the value of Bitcoin goes far beyond its simple value or its volatility.

During a recent exchange with one of the pioneers of the Blockchain ecosystem Remy Ozcan, President of theFrench Federation of Blockchain Professionals, he referred to the law recently passed in the United States which

« confirms that banks can become validator nodes and can use stablecoins to improve cross-border money transfers. Blockchains thus have the same status as other global financial networks such as SWIFT, ACH or FedWire. This is an important step towards switching to a market infrastructure based on Blockchain technology. Not anticipating it could be fatal for banking players. »

If this technology is now officially part of the American financial infrastructure, it will soon spread to Europe, and Christine Lagarde may ask to regulate the “speculative” Bitcoin, there will certainly be no posible technological return.

Securing remote payments; Intermediation; Action trading … the application of Blockchain for the banking system is vast and continues to expand to other uses such as KYC (through the creation of a digital identity), the legal aspect with smart-contracts, securing sensitive data. Uses and networks that are under construction all over.

Thus the JP Morgan’s initiative called IIN (Interbank Information Network) already brings together 412 banking institutions, and other Consortia such as R3 or Hyperledger are relaying the usefulness of the Blockchain to facilitate and accelerate certain transactions in the banking sector. Blockchain also represents a huge reduction in costs for this sector. Between 15 to 20 billion dollars by 2022 according to a study from Santander

So if the Bitcoin recent correction in the price of frightens some, it does not shake the validity of the Blockchain technology, which already in 2016 according to the Bank of France represented a “major innovation”:

« decentralization of security management prevents falsification of transactions ».

However, 4 years later the AMF recalls the risk of capital loss “linked to virtual currencies, to which other risks are added: loss of all or part of the invested capital, lack of regulation, lack of detailed information, fraud or scam …»

Is it really the Bitcoin bubble that Europe fears the most? Because this is not a new phenomenon. Thierry Crovetto analyst at TC Stratégie Financière in Monaco, recalled in one of his notes, entitled “irrational exuberance of the markets” that this phenomenon dates back to the 17th century with “one of the first bubbles called” tulipomania “which was characterized by the disproportionate increase then the collapse of the prices of tulip bulbs in the Netherlands »

Or is it regulatory loopholes, and the risk of money laundering that scares Europe? However, we know that all Bitcoin transactions are public, traceable and kept indefinitely in the Bitcoin network, which means that anyone can view the balance and transactions of an address.

Or is it rather this disconnection from the markets and the real economy? The loss of confidence and value of fiat money? Remember that 20% of M2 money supply was printed in 2020. So why to doubt more of Bitcoin than the dollar today?

Bitcoin could be the catalyst for all our fears: the too rapid and uncontrollable transformation of our society and economic logic, a technological ramification at all levels of traditional finance, new entrants, new demands, the suppression of intermediaries, old-fashion and inoperable control systems on the Blockchain.

Whether Bitcoin is a virtual currency or a digital asset, does it in itself change the solvency of its technology?

Article: Joana Foglia

Post Author: Wealth Monaco

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