Fraud or Friend? Experts Face Off Over Bitcoin and Cryptocurrency

Fraud or Friend? Experts Face Off Over Bitcoin and Cryptocurrency

Big banks are threatened by crypto-currency, but that is not preventing one from predicting a giant move in  BTC value  over the coming years.

It is fair to say that 2017 has so far been a banner year for cryptocurrency, with governments and institutions around the world making policy, starting up large-scale tests, and overall, taking the whole concept quite seriously.

A comprehensive 41-page report published by Canadian investment bank, Cannacord Genuity, speaks largely optimistically about the future of Bitcoin, Ethereum, other cryptocurrencies, and blockchain technologies. Among its key observations:

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  • The cryptocurrency market size is set to grow ten-fold to $1 Trillion by 2025
  • Blockchain remains the core to further adoption
  • Bitcoin adoption continues to increase, and it remains the most widely recognized cryptocurrency, with overall BTC value to hit about $500 billion (in terms of market cap)
  • Ethereum's presence is solidified as it offers a compelling alternative to bitcoin
  • ICOs, despite their collective dubious reputation, continue to accelerate interest in cryptocurrencies

The paper describes a technology/currency/economy that is still clearly in transition, from a theoretical, mathematical construct to an actual working system. Despite its shortcomings, including numerous serious collapses, robberies and government stonewalling, the overall tone of the paper is one of inevitable progress, as blockchain and cryptocurrency technologies take hold in every corner of the world.

Perhaps most significant is the authors’ acknowledgement of the progress being made in China, in that the Chinese government has ruled that cryptocurrencies will be regulated but recognized. This acknowledges a significant step forward after an earlier shock announcement that exchanges and ICOs would be banned from this highly influential marketplace.

Well-researched reports such as the Cannacord Genuity paper highlights the larger debate between financial experts as to whether the entire thing is a fraud, or whether it is about to rocket to new heights.

On the “fraud” side, one of the most vocal naysayers has been Jamie Dimon, Chief Executive Officer of JPMorgan Chase & Co. Mr. Dimon is certainly very highly placed in the financial community, and his assessment of BTC value specifically is that it is a fraud, worse than the Tulip mania of the 17th century. Speaking to an investors’ conference in New York in September 2017, and quoted by Bloomberg and others, he promised to fire any of his employees who traded in Bitcoin, and believed it was of use only to drug runners, criminals, or for people operating in “Venezuela or Ecuador or North Korea or a bunch of parts like that.”

Mr. Dimon’s dismissal of  BTC value has some technical validity, in that he cannot envision a currency that exists “without state oversight, especially if something goes wrong. ‘Someone’s going to get killed and then the government’s going to come down,’ he said. “You just saw in China, governments like to control their money supply.”

He was slightly more bullish on blockchain technology, which he believes has merit, but will not be an “overnight’ application by banks.

Another financial heavyweight, Lloyd Blankfein of Goldman Sachs, echos the same decentralized currencies argument directly on his Twitter feed.

On the “friend” side of the argument, one of the most visible and colorful proponents of BTC value is John McAfee, inventor of the security software that bears his name. Mr. McAfee is well known for his technological innovations, but is also infamous for his eccentricities, his run-ins with the law and the media. However, he also has been instrumental in developing a range of products and applications around smartphone and data security.

His own assessment of  BTC value is that it stands the chance of rising to $500,000 in three years. It can be argued – and many on Reddit do just that – that Mr. McAfee’s statements on btc value are part of his eccentric personality, and are being made to help promote his own bitcoin operation, MGT Capital Investments. But there are many other brilliant mathematical and technical minds that share similar sentiments – that blockchain will become the central axis of all types of business, and that Bitcoin will skyrocket as more users join the party and as we come closer to the mining cap of 21 million.

There are proponents and detractors of all types, from trailblazers like Ethereum’s Valerik Buterin to Paris Hilton, all of whom, pro or con, struggle to describe a medium that is almost too large to envision, much like how an 18th century writer like H.G. Wells might describe the Internet of Things.

On the receiving end, the concept of a centerless virtual currency is extremely difficult to grasp for most ordinary people, and indeed it appears that true centerlessness may never be attained, as countries hurry to establish regulations to protect against fraud and theft, and seek to put their own stamp on the currencies, tokens and blockchains being used on their soil. This has striking similarities to the Uber paradox: an upstart, centerless transportation company that is now finding itself alienated by cities like London, England, for the very things that made it special: no central regulatory hub.

Canaccord Genuity’s paper does well to place an optimistic stamp on the entire emerging market. It is well worth a read, and serves both as an interim report as well as a crash course on all things crypto.

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