Over the last few months, the price of bitcoin has been on the up — and in quite dramatic fashion. At the time of writing, it is closing in on its previous 2019 price high, having shot up by $500 in just ten minutes. A recent 7-day period experienced a 43% increase.
What’s causing the spikes is the subject of much debate, with everything from US-China trade tensions to Facebook’s Libra coin announcement being suggested as possible factors. Whatever the reason, it’s hard not to think back to the huge price fluctuations of late 2017 and early 2018. If you’re wondering whether it’s worth getting involved, what it’s all about, and whether we’re about to see a repeat of what happened two years ago, you’re not alone.
To get a bit of perspective, Andy Bryant, co-head and COO of bitFlyer Europe — one of the world’s largest and longest-standing virtual currency exchanges, answers some questions about cryptocurrency.
Andy, for readers who’ve not come across bitFlyer before, who are you?
bitFlyer is a virtual currency exchange for everyday users and professional traders to buy and sell virtual currencies like bitcoin. Our headquarters are in Japan, where we have over 2 million users, and we launched in Europe in 2018. We also operate in the US and in the last 12 months, we’ve been recognized as one of only 10 exchanges that isn’t faking trading volumes.
You’ve been quite vocal about the need for greater regulation in the crypto industry. Why is this important?
We’re passionate about the future of this industry and believe regulation is fundamental for mainstream adoption. We’re actually the only cryptocurrency trading platform in the world that has a license to operate in Europe, Japan and the US combined. Others operate, but without a license. Banks and other financial institutions cannot operate legitimately without a license — we believe cryptocurrency exchanges should be held to similar standards.
What do you say to people who still think crypto is a bubble?
That it is here to stay. We actually just did some research into consumer confidence, which revealed that 63% of Europeans believe cryptocurrencies will still be around in ten years’ time. We surveyed 10,000 people across ten countries and more than half the population in every single country believes in the future of cryptocurrencies. In case you’re wondering, Norway was the most confident, with 73% of the population believing crypto will be around for the next decade, and France was the least sure — and even there 55% believed in its future. What this shows is that the reputation of cryptocurrency has moved beyond the hype and is now more established.
What’s your take on the current levels of activity we’re seeing?
Things are certainly starting to move again, and all the activity shows that despite all the naysayers and skeptics, bitcoin isn’t going anywhere. Volumes are growing, the network is strengthening, and the profile of buyers is broadening as different types of investor join the fray.
Furthermore, since we last saw all the hype at the end of 2017, there have been several important upgrades to the technology that have improved scalability and position bitcoin well for this next phase of growth I believe we’re entering.
Help dispel some of the misconceptions. Any myths you’d like to debunk?!
There are so many! I’ll take just three.
- Virtual currencies can’t have any value because they aren’t tangible. Just because you can’t hold bitcoin in your hand doesn’t mean it doesn’t have value. The Coca Cola brand is valuable. Intellectual property is valuable. Goodwill is valuable. In fact, most things in this world that have value aren’t tangible.
- You can’t spend it anywhere or pay your taxes with it, so what’s the point? Firstly, who says bitcoin is trying to just be a payment method? We need to remember that bitcoin has only been around ten years and we’re only beginning to get our heads around what else blockchain technology can be used for. Just because bitcoin is not yet widely used as a money, doesn’t mean it won’t be. We don’t write off a 7-year old’s basketball career just because they are short, so why write off bitcoin just because it’s young? And in fact, in Ohio you can already pay your taxes in bitcoin, with Arizona, Colorado and Wyoming also considering moves to integrate bitcoin into everyday use.
- Cryptocurrencies are only the domain of criminals and money launderers. That’s simply not true. All types of people are investing in cryptocurrency now. A study by Elliptic showed that money laundering on the bitcoin network is less than 1%. That’s compared to global money laundering on the existing financial system (which is of course far, far bigger) being at around 2-5% of global GDP (U.N. figures). In relative terms the global financial market is being far, far more exploited for money laundering.
And for those fence-sitting readers who are intrigued about crypto but not yet convinced, say it straight. What are your top five reasons people should care about crypto? Why should people get involved?
- Nothing is guaranteed and I don’t give guidance on price, but what I will say is, cryptocurrencies are not simply a different investment; they are an entirely new asset class. The last time the world saw an entirely new asset class was over 300 years ago when the Bank of England issued the first ever government bond to fund a War with France. If cryptocurrencies continue to establish themselves and succeed as a new asset class, which I believe they will, then the ramifications will be global and profound.
- The world is paying attention now. Governments, blue-chips, the IMF, the BIS, the G20, the US Fed, the Bank of England, are all talking about it. It’s clearly more than just a fad. In fact, discussions about how to regulate crypto and blockchain properly are already taking place at the highest level and have been for some time. bitFlyer is frequently involved in those discussions and in Japan we were involved with the amendment to the Payments Act which famously recognised bitcoin as legal tender.
- Volatility needs putting into perspective. As I’ve said, cryptocurrency is an entirely new asset class. Because it’s new, it’s also small. The market cap of bitcoin is just over $200 billion. Apple — just one company — has a market cap of over $920 billion. Gold as an asset class has a market cap of $7-8 trillion and real estate is over $200 trillion. The point is, trillions of dollars are being traded every day. Those more established assets are like oil tankers on the open sea. Waves of money come in and out and they hardly budge. Bitcoin is like a dinghy in comparison. It’s sensitive to those movements. That’s why we’re seeing this volatility. It’s not surprising and it’s something we’d expect to even out over time as the market matures.
- Blockchain takes away the need to put your trust in intermediaries for your most precious and personal information. That’s a huge, huge deal. Think of all the digital items that you wouldn’t want to be ‘copy and pasted’; your money, identity, medical records, votes, social interactions etc. Now think about all the existing companies/institutions that you today rely on to manage and control these digital items. Are they doing a good job? Are they investing in the future? Are they agile enough? Are they exploiting their position in any way? Are their incentives aligned with yours? By removing intermediaries and levelling the global playing field, blockchain is poised to disrupt the status quo of ‘value’ as much as the internet disrupted the status quo of ‘information’. Except much faster. It’s going to be fascinating.
- Cryptocurrencies are a global phenomenon. People in Korea are buying them. People in Venezuela are buying them. People in Kenya are buying them. Do you want to be part of this globally-validated movement or stick to your local preferences?
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