James Angel, Professor of Finance at Georgetown University, on Bitcoin popularity and its future prospects
Currently Bitcoin is the world’s fastest growing currency. What are the main features of Bitcoin and why investors’ interest in Bitcoin is increasing?
I agree that Bitcoin is "the world's fastest growing currency". Bitcoin is an attempt to create an electronic currency that is not controlled by a government. It is controlled by a computer standard that allegedly limits the total number of bitcoins that can be created. Right now, bitcoins are created ("mined") by computers that do calculations to verify Bitcoin transactions. Bitcoin has attracted quite a bit of interest from four distinct groups:
1) "The end-is-near" types, who fear financial doomsday, view Bitcoin as a potential inflation-free haven similar to an electronic gold standard.
2) Cyber-libertarians, who see the near anonymity and lack of government oversight as an attraction.
3) Operators in the underground economy such as the infamous Silk Road web site, who perceive Bitcoin as a payment system for drug purchases, money laundering, etc.
4) Entrepreneurs, who want to cash in the fad. Indeed, given that the total number of bitcoins will allegedly be fixed, the total growth will soon be zero.
Bitcoin is traded online without any kind of central bank or institutional supervision, thus making the currency attractive to drug dealers, terrorists. Do you see that further Bitcoin trading might be restricted or even prohibited to prevent tax fraud, money laundering, and other illegal activities?
Governments will do everything in their power to crack down on money laundering and tax fraud. This means that in order for Bitcoin to be anything other than an underground service on the run from the authorities, the institutions that operate in the Bitcoin realm will have to be regulated just like other financial institutions. There are very good reasons why we regulate financial institutions to protect the public from fraud and to protect the economy from financial meltdowns. Governments will expect payment processors in the Bitcoin realm to be regulated just as they are for other currencies.
Currently Bitcoin is the world’s fastest growing currency. What are the main features of Bitcoin and why investors’ interest in Bitcoin is increasing?
I agree that Bitcoin is "the world's fastest growing currency". Bitcoin is an attempt to create an electronic currency that is not controlled by a government. It is controlled by a computer standard that allegedly limits the total number of bitcoins that can be created. Right now, bitcoins are created ("mined") by computers that do calculations to verify Bitcoin transactions. Bitcoin has attracted quite a bit of interest from four distinct groups:
1) "The end-is-near" types, who fear financial doomsday, view Bitcoin as a potential inflation-free haven similar to an electronic gold standard.
2) Cyber-libertarians, who see the near anonymity and lack of government oversight as an attraction.
3) Operators in the underground economy such as the infamous Silk Road web site, who perceive Bitcoin as a payment system for drug purchases, money laundering, etc.
4) Entrepreneurs, who want to cash in the fad. Indeed, given that the total number of bitcoins will allegedly be fixed, the total growth will soon be zero.
Bitcoin is traded online without any kind of central bank or institutional supervision, thus making the currency attractive to drug dealers, terrorists. Do you see that further Bitcoin trading might be restricted or even prohibited to prevent tax fraud, money laundering, and other illegal activities?
Governments will do everything in their power to crack down on money laundering and tax fraud. This means that in order for Bitcoin to be anything other than an underground service on the run from the authorities, the institutions that operate in the Bitcoin realm will have to be regulated just like other financial institutions. There are very good reasons why we regulate financial institutions to protect the public from fraud and to protect the economy from financial meltdowns. Governments will expect payment processors in the Bitcoin realm to be regulated just as they are for other currencies.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates
Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY gathers strength to near 157.50 as Takaichi’s party wins snap elections
The USD/JPY pair attracts some buyers to around 157.45 during the early Asian session on Monday. The Japanese Yen weakens against the US Dollar after Japan’s ruling Liberal Democratic Party won an outright majority in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi.
Editors’ Picks
USD/JPY gathers strength to near 157.50 as Takaichi’s party wins snap elections
The USD/JPY pair attracts some buyers to around 157.45 during the early Asian session on Monday. The Japanese Yen weakens against the US Dollar after Japan’s ruling Liberal Democratic Party won an outright majority in Sunday’s lower house election, opening the door to more fiscal stimulus by Prime Minister Sanae Takaichi.
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates
Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.
Gold: Volatility persists in commodity space
After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.
Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms
US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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