When millions start thinking about what money is from first principles, the toothpaste is out of the tube

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Bitcoin is uncontrolled and uncontrollable and is going through the classic Ghandian four phases – “First they ignore you, then they laugh at you, then they fight you, then you win”. We are sort of in phase 3, except many governments and big companies want to benefit from Bitcoin going mainstream, so there is no clear united opposition to Bitcoin. That was true for Ghandi as well – many in Britain also thought that India should be independent.

Whether it is Bitcoin or some other cybercurrency or some combination of cybercurrencies is not the issue. All will fuel and be fuelled by a change in thinking. Nor will Fiat currency go away, any more than newspapers, TV and physical stores went away.  The past and the future are always with us, even if unevenly distributed.

What is bigger than any single cyber currency is that millions of people are starting to think about what money is from first principles. The basic thought is that money is only worth what we all agree it is worth. Once that thought gets established in the minds of millions of people, the toothpaste is out of the tube and you won’t get it back in.

That thinking is fuelled by Blockchain, Bitcoin and Cybercurrency for sure. These innovations force us to think outside the box. The momentum behind Bitcoin creates lots of conversations where mainstream people ask early adopter to tell them about Bitcoin. That conversation may end in people just dismissing it as crazy, but enough people do start thinking a bit differently and then the next next time they look at Bitcoin they have a more open mind.

It is not just Bitcoin that changes how we think about money:

  • Consumer to consumer payments. Whether it is Venmo or Zelle or Square Cash or any number of alternatives, the idea that I can send cash as easily as email gets established in people’s mind. This has nothing to do with Blockchain, Bitcoin and Cybercurrency, but it does change thinking. It is then a short mental hop from sending cash in USD to sending cash in Bitcoin.
  • Initiatives to end Fractional Reserve Banking in many countries. It has already happened in Iceland, is going to referendum in Switzerland (where it is called Vollgeld) and has serious establishment figures (such as Lord Adair Turner and Martin Wolf) backing the idea in the UK (where it goes by the name Positive Money). The UK based Positive Money is also getting attention in other English-speaking countries like USA and NZ. The schemes vary in detail and obviously get vociferous and well-reasoned opposition from the banking lobby, but what is interesting is that when the schemes are explained to mainstream consumers the most common reaction is “that is how I thought banking worked”. It is the idea of Fractional Reserve Banking – how the world works today – that seems weird to ordinary people.
  • Fintech regulation. When companies can get regulated for all the different functions of a bank (see Swiss Fintech License as an example), you start to ask “what is a bank that is different from a licensed Fintech?”  The answer is something along the lines of “an institution that is allowed to do  Fractional Reserve Banking”.
  • Local currency use cases. See this post about Colu. This is a simple mental transition. The currency has a familiar name – Pound or Dollar for example – and pegged convertibility to your Fiat currency. Yet it is not Fiat currency as we normally think about it.
  • Heavy handed government action. Whether it is demonetisation in India or the Cyprus government taking money from your bank account, the idea that your money is your money becomes challenged in the Fiat currency realm. That makes people motivated to look for alternatives.
  • Doubts about silver and gold. Taking the long historical view, Fiat currency may be viewed as a blip. That is the view of many who like Silver and Gold. Yet there are doubts also about these markets. Is the Silver market manipulated. Is some physical gold really Tungsten with gold plate?

Crossing the Chasm inspired lots of entrepreneurs. It was written as a guide for teams planning the crossing. What is fascinating about Bitcoin, is that there is no team doing that planning. There is only what we often call community, but which could also be described as warring neighbours at times. That is a strength in my opinion. It makes Bitcoin AntiFragile (another book that has inspired so many).

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Bernard Lunn is a Fintech deal-maker, investor and thought-leader. 

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Israel’s Colu launches Blockchain based Community Currency – “Local Pound, East London”

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Colu, a blockchain based payments app is pioneering the concept of localising cryptocurrency for a better community. Colu offers peer-to-peer payment platforms facilitating digital financial transactions at local businesses, creating a closed-loop economy to bolster the economic well-being of the community. Earlier this week they launched the “Local Pound, East London”.

Founded in 2014 by Amos Meiri, who had also founded ColouredCoins.org before then, Colu use the blockchain for various types of financial transactions – both physical and digital. They initially created local currencies for some parts of Tel Aviv, and as the community and the customer base increased, they brought them together under an umbrella currency for Tel Aviv (Florentine Shekel). They now have local currencies for Jaffa (Pishpesh Shekel) and also have created the local currency for Barbados (Barbadian Digital Dollar).

“What we did is, we developed what we call an economy in a box. A solution to manage digital currencies on top of the Blockchain”

Many British towns and cities are already familiar with the concept of a local currency, usually supported by the local council. Bristol, Brixton, Exeter, Kingston, Glasgow, Birmingham all have their local currencies. Colu have added to this list by launching their first UK based local currency for Liverpool in 2016, and now for East London.

Research by Local Multiplier 3 shows that every £1 spent with a local supplier is worth £1.76 to the local economy, and only 36 pence if it is spent out of the local area. That makes £1 spent locally worth almost 400 % more to the local economy. That’s a much better proposition than paying multinationals for the same products and services.

Colu have chosen Liverpool and East London because they believed there was a strong sense of community pride and a booming tech landscape that would help build a local digital economy. The Liverpool Pound now has about 16000 users and about 30 businesses accepting the currency. Businesses pay a £20 monthly fee to Colu. Customers then pay via the app on their phone, and Colu pays the businesses what they’re owed on a monthly basis.

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Local currencies have had challenges in sustaining the initial momentum, as its essential for local businesses and their suppliers to be using them consistently. Local currencies created in the UK so far have been supported by their councils, and when the currency loses steam, they can get behind it.

Not sure if Colu would receive such support if needed. However, they have reached 50,000 customers and $1 Million in transactions on their platform. Momentum is certainly there.

Arunkumar Krishnakumar is a Fintech thought-leader and an investor. 

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P2P Insurtech for Bitcoin and Ether exchanges needed

science-fiction

No, that headline was not created by a random buzzword generator – fun as that could be as a side project.

This is science fiction. If I worked for a big management consulting company I would call it Scenario Planning. Or you can call it “Venture Wanted”. AFAIK no venture addresses this need. If I am wrong, please tell me.

The idea came from reading our new Author, Ilias Louis Hatzis, who is writing our Blockchain, Bitcoin & Crypto weekly post on Monday.

The issue he was addressing was how Crypto Exchanges such as Mt Gox and Bitfinex have lost a lot of customer funds. He described traditional insurance addressing the problem in Japan (which we reported on here) but he also floated the idea of an an FDIC like organization for Bitcoin/Cybercurrencies and the idea from Andreas Antonopoulos that Bitcoin exchanges should create a “common risk pool fund”, that would insure customer funds in case of theft. Maybe a P2P Insurance venture looking for an early adopter market with a serious pain point is listening?

If you like this idea and want to contribute to making it happen – or know of a venture already offering it, please go to this thread on the Fintech Genome – the place where great conversations make things happen.

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Bernard Lunn is a Fintech  deal-maker, investor and thought-leader. 

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Klarna lands banking licence – where to next?

This week e-commerce payments platform Klarna announced it had secured a full banking licence from the Swedish Financial Supervisory Authority. This is a huge achievement, and will allow Klarna to deepen its hold on its existing customer base.

Why is this big news in small business banking terms?

Klarna currently has an installed base of 70,000 merchants and it has facilitated online purchases for 60 million customers across 18 markets.

As a merchant payments provider, it has primed its base to feel comfortable making non-bank initiated financial transactions across its network. This ‘trust bank’ will allow Klarna to easily move deeper into the banking value chain for SMEs, providing traditional bank accounts. By essentially ‘damming’ the river of payments each business receives it will gain access to a lower cost of funding for its credit products.

With its consumer credit options, Klarna already helps businesses reduce their working capital needs by pre-funding purchases to merchants immediately, however it’s not hard to imagine the business using its licence to develop richer and more sophisticated merchant cash-advance products. If these help the retailer grow or add new product lines, the Klarna business benefits as a result – a highly virtuous cycle.

What could this mean for consumers shopping with small businesses in the Klarna network?

Klarna has already been acting like a quasi-bank, by providing credit at the online point of sale. Extending this for use offline by Klarna merchants seems a logical next step. In Australia the likes of Afterpay and zipMoney are making forays into the ‘buy now pay later’ game in the bricks and mortar space, to complement their online offerings.

What else could be next?

One area that seems relatively untouched by fintech is the gift card space. In 2015 consumers spend $130 billion on gift cards, up from $118 billion in 2014. Some research bodies estimate as much as $1 billion in gift cards go unused each year. While this is money for jam for retailers, it’s not so great for consumers. Unsurprisingly a crop of startups have emerged in this space to try to address this problem, helping consumers trade gift cards online. Zeek and Raise are worth checking out.

Given Klarna operates a two sided market – consumers and retailers – it could potentially develop a novel solution that incorporates issuance and a post-issuance marketplace. It’s just another flavour of store credit.

It also seems like a Klarna digital currency could be a possible play. With its network of stores across global market places, making it easier to transact and manage forex would be a winner for consumers and merchants. And if they can do it for less within a closed system, compared to the forex charges merchants and consumers are stung with by credit card companies and remittance businesses, then there is a natural network effect that could be taken advantage of.

If buying Klarna dollars could get me better discounts on products within the network of merchants, then it’s the ultimate loyalty/dollar hybrid, that unlike store points, doesn’t lock me into a specific merchant. The loyalty game is definitely changing, and Klarna is well positioned to reinvent this through its banking offering.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

Lykke: the early pioneer in the next generation of Global Digital Asset Marketplaces

Lykke has been ahead of the curve in the Capital Markets 3.0 evolution, in multiple ways. I confess it is difficult to put an order to all the aspects of the Lykke venture, simply because it is a Big Hairy Audacious one.

Lykke is open-source (if you fancy, go to Github here and download here). And maybe retail like you and me, doesn’t care, but it is a big deal in the 4th industrial revolution. Open source is the first pre-requisite to hope for network effects. Financial markets and especially, asset trading has not been used to business models with network effects. On the contrary, it has been operating in proprietary mode either on the data side or on the modeling side.

Lykke is real, live and way beyond beta mode. You can register on the Lykke App and not only get quotes for several cross pairs (from fiat exchange rates to crypto crosses) but you can also see the order book real time!

Lykke seems for now, like an FX trading app that keeps adding more crosses. True that it keeps adding more “assets” to its menu of capabilities; the most recent one being Ether crosses. True that it also has some commodities like Gold, Palladium etc; and some less known colored coins like the Solar colored coin, the Tree colored coin etc.

Lykke isn’t just another trading app using the colored coins protocol. Lykke wants to become a global marketplace for all digital assets. All the magic is hidden in the new understanding of “Digital assets” and “marketplace”.

Coming from an upbringing in the old world, we can imagine mapping “Digital Assets” to fiat currencies, all sorts of financial instruments typically issued by businesses (currencies, public or private equity shares or bonds from corporates or governments ect.). Such thinking is a linear extrapolation from current reality; i.e. take shares in a public company or gold in a vault and create a digitized version of it.

But Lykke is going after the new world that is allowing for the creation of new asset classes, the true digital assets, the tokenization of all: e.g. utility tokens in the protocol layers that are being built as we speak (e.g. Tezos TEZ, Golem GNT etc), or tokenized values like the TREE colored coin which entitles the holder to a Mangrove tree CO2 certificate or the TIME colored coin from Chronobank which is a labor market; or tokenization of business processes like the IATA token.

Lykke wants to be the global marketplace with the new understanding. They want all business to be launched and executed on their app. When I say all, I literally mean all. The Lykke app wants to be the center of the world. Whether you are a retail individual (investor, trader in the old sense, or not) or a business (to be built or grown up with complex business processes) or a government; Lykke wants to serve your needs. The accelerator they launched recently, will grow the ecosystem and have the desired network effects. Lykke is open of course, to all sorts of business partnerships, for example, the recent partnership with Splendid, a Swiss student loan lender, for servicing international students via blockchain transfers, a process which cuts costs of such cross border transactions and simplifies the process.

Lykke is using the colored coins protocol, not the ERC20 token standardization which has become the most popular software during the recent ICO boom. The colored coin protocol is of open-source and requires programming to be used (one of the reasons that the ERC20 standard has been massively adopted is the ease of use).

The colored coin foundation started in 2013 and is based on the Bitcoin ecosystem. Currently, there are 4 entities that have joined the consortium: Lykke, Colu, Bitt, and Etoro. Bitt is the venture focused on the launch of the Barbados Dollar on the blockchain with the local central bank. Colu is an Israeli venture focused on standardizing the colored coin protocol and the development of their mobile wallet. EToro the social trading platform just recently announced a pilot crypto-wallet that aims to tap into the ICO market.

Lykke’s approach

The exchange that Lykke has created is running on the colored coins protocol. What differentiates it from the newly launched (only beta version running) Bancor venture which broke the record in terms of ICO funding, is that it Lykke’s exchange is based on a P2P matching process whereas Bancor claims to have a secret sauce that creates liquidity and allows for automatic price discovery without requiring a counterparty (which is a breakthrough). Lykke is on the colored coin protocol and Bancor is using the ERC20 standard.

BNT (the $153million ICO) are utility tokens for their exchange (to be built). LKK the colored coins trading on the Lykke app (for now) are not utility tokens but equity shares. 100 LKK coins represent one share in the Swiss registered and regulated company. Lykke is going international in Asia but is not yet available in the US.

The shares of the company have surged in the past months (read more about this from the CEO Richard Olsen here).

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Lykke was early in using the ICO funding mechanism. They placed their first public shares last October and raised CHF1m and in February-March this year they innovated in placing 1yr forward Lykke shares (LKK1Y colored coins) raising CHF2m. They are leading the way in showing others how Capital markets 3.0 can work on their app. I expect that they will be innovating more going forward.

Their most recent innovation already operational (for now only for Bitcoin) is the Offchain Settlement integration on their exchange. This makes the network faster but still has the safeguards of the blockhcain.

Disclosure: I am a shareholder of the LKK coins and look forward to the experience of the first Digital annual shareholder meeting on the 29th of June, were more than 3000 shareholders from 87 countries will come together and vote. Stay tuned.

The race has picked up speed at the protocol layer and at the Dapps layer (payments, exchanges etc). Lykke was live early with a stunningly simple UX and will now has to compete with the recent “white papers” and “MVPs” that are getting piles of funding to accelerate their development. The Lykke “Go-to-Market” strategy is taking the regulatory route (i.e. obtaining exchange licenses in Singapore and the US, payment licenses and even investment licenses in Europe) and aiming to become the center for exchanging value for everybody (from consumers to businesses).

The invitation to join the great global conversations referring to Lykke on the Fintech Genome, is open. Join to learn and contribute here.

Efi Pylarinou is a Fintech thought-leader, consultant, and investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

 

Blockchain Bitcoin & Crypto Weekly CXO Briefing for week starting 19th June 2017

The Blockchain Bitcoin & Crypto Weekly CXO Briefing is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world. Each week we select the 3 news items that matter and explain why and link to one expert opinion.

Editor’s Note: I know the purists say we should use bitcoin (lc) for the currency/store of value use and Bitcoin (uc) for payment rail/technology. As bitcoin and Bitcoin are going more mainstream, I think it makes sense to capitalise everything because it is a word in common use and it is now common to refer to Blockchain or DLT when we want to only talk about technology.

For the intro to this weekly series, please go here.

News Item 1: Is There Blockchain-Related Talent Bubble? LinkedIn Adverts Surge

Decrypted: Bitcoin and cryptocurrencies are seeing spectacular gains, but that is not only thing that’s in huge demand. Companies are hunting for people with blockchain skills, according to data from LinkedIn. Over the last week, 1,000 blockchain jobs were posted on LinkedIn and 9,945 people on the site listed blockchain as a skill. Blockchain jobs are on the up and blockchain engineers are commanding six figure salaries.

Our take: The blockchain job market is booming. At least 1,876 people are working full-tme in the cryptocurrency industry, and the actual total figure is likely well above two thousand if we include large mining and other organizations based on research from the Centre for Alternative Finance at Cambridge University. This is just the beginning, as huge growth is expected in the enterprise blockchain business over the next 10 years. Ameri Research predicts that the global enterprise blockchain market is expected to reach $16.3 billion by 2024, from around $2.3 billion in 2016. Also with “ICO Fever” and more than 850 different cryptocurrencies in the market, no stone will be left unturned. Blockchain will practically infest everything. Every day we read about another story about a new blockchain application, ranging from finance and cybersecurity to government services, education, health care, advertising and entertainment. Today, cryptocurrency dominates blockchain, but with all these other industries making use of blockchain, people with right skills will have plenty of room to maneuver in sectors outside of Fintech.

Demand is up, but supply is still low. The current situation drives two things. One is the pay for those with the skills and on the other end the opportunities for organizations that can teach people these skills. The demand for blockchain developers exceeds by far what is available out there and corporations are struggling to find blockchain expertise, as most of the people with these skills are already working at blockchain startups that emerged over that last few years. Everyone is scrambling to get a blockchain team in play, and this driving the blockchain education market.

If blockchain platforms do their job well, some of these skills will become commoditized. Think back to when being able to read and markup HTML was a premium skill. It should be as easy to deploy to the decentralized network, as it is today to deploy to a centralized cloud service. There will always be need for a few people who understand how it works below the covers, but they will be a small minority.

More and more universities, workshops, grass root efforts, bootcamps and online training are popping up everywhere, teaching the basics and offering hands-on training in Blockchain, Bitcoin and Crypto. But one of the problems they are facing, especially at the university level, is the chicken and egg problem. Its hard for them to find qualified people to teach blockchain-related subjects.

It will be interesting to see how things develop. It will take time and the joint efforts of all the players in the ecosystem to build a blockchain talent force that will create future blockchain innovations.

News Item 2: Bitcoin’s soaring price means bankrupt Mt. Gox may soon be able to pay its creditors

Decrypted: In 1978 the famous $6 million Lufthansa heist went down. In 2014 the infamous $450 million Mt. Gox heist went down, the biggest in Bitcoin history. By all accounts, 850,000 Bitcoins were stolen. Since, 202,185 Bitcoins were recovered, while 650,000 are still missing. You can find an interesting timeline of events surrounding Mt. Gox on CoinDesk.

Now with Bitcoin prices skyrocketing, it has surfaced that Mt. Gox might be able to pay back all its customers, using the recovered Bitcoins. With last week’s value of Bitcoin, these Bitcoins could be worth anywhere between $550-$600 million, leaving some pocket change after everyone is paid back.

Our take: Like many others, Mt. Gox launched in 2010 with a simple idea in mind. It wanted to provide a single place to connect Bitcoin buyers and sellers. It became the world’s most popular Bitcoin exchange, handling over 80% of all Bitcoin transactions around the world. Eventually it failed, causing a tidal wave to hit an entire market.

The Mt. Gox claim was that they lost the money because of a problem with Bitcoin known as transaction malleability, “a bug in Bitcoin.” It’s a great excuse. But Mt. Gox was not a victim of transaction malleability and it’s certainly not the explanation for its epic failure. Actually, there were several failures before the final collapse. Its failure was a combination of several things ranging from lack of standards to pure incompetence.

Many if not most of the entrepreneurs in the digital currency industry come from a technology background with no real understanding of the compliance requirements for financial institutions. As a result, most of the time, compliance gets the shaft.

Can it happen again? The short answer is yes, it can. It has happened. Since the Mt. Gox breakdown, there have been several hacks that resulted in loss of customer funds. The largest incident was Bitfinex. In August 2016, Bitfinex was hacked for 120,000 Bitcoins, worth north of $60 million.

What needs to be done to minimize the risk of loss? Well, let me start by referencing a past BBC post:

“In 2016, Japan passed a bill that mandates that virtual currency exchange operators have to register with the Japanese Financial Services Agency and submit to on-site inspections and KYC practices. This level of regulation encourages insurance companies to step up the plate and offer insurance to Bitcoin exchanges.”

This piece of legislation prompted Mitsui Sumitomo Insurance of offer insurance coverage to Bitcoin exchanges. Insurance is a strong component of the puzzle that could help Bitcoin community, but more needs to be done before an insurance company has to cover the losses due to a breach.

The Bitcoin industry needs an FDIC like organization. The FDIC’s most important role in the banking system is the standards it creates.  An idea that has been floated in the past, suggested that experts should police each other. Bitcoin exchanges should create a “common risk pool fund”, that would insure customer funds in case of theft and set standards for Bitcoin exchanges that choose to participate.

A FDIC-like organization for Bitcoin would set standards in accounting and security for Bitcoin exchanges. Unlike the banks protected by FDIC, the Bitcoin exchanges would not be legally required to abide by these standards. If a Bitcoin exchange doesn’t agree with the standards, they would be free to continue to operate under their own guidelines. Now if we were to couple standards and audits with insurance protection, then Bitcoin exchanges would be in a much better place.

The history of Bitcoin exchanges is marked by failures triggered by security breaches. Things breakdown, things get hacked. But there is light at the end of the tunnel and ways to minimize the risk of loss when and if it happens.

Before we close, it looks like Mt. Gox’s creditors will be getting back the the money. With the ruling of the Japanese court to liquidate Mt. Gox, now its the trustee’s job to convert Mt. Gox’s recovered Bitcoins into cash and pay back the creditors, at the value when Mt. Gox shutdown. DRW offered to help liquidate and four hedge funds are already buying or offering to buy claims from thousands of former Mt. Gox customers who lost their Bitcoins.

News Item 3: $150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO

Decrypted: Initial Coin Offerings (ICO) are driving a wedge in the startup investment landscape. They are changing the way founders raise money, outside the traditional venture capital world. In the most recent ICO last week, Bancor set a new record high raising $153 million.

Our take: ICOs are hot. They are here to stay. The amounts they raise will continue to grow, while the time it takes to raise money will drop. But it looks and sounds just like the late 90’s, when too many companies saw their stocks skyrocket, even though they didn’t make a dime.

Are we living a 1999 bubble crypto-style?

It all started in 2013, when Mastercoin raised 4,740 Bitcoins worth approximately $613,000. Fast forward to April 2017, GNOSIS raises $12.5 million in just 12 minutes. Wow!

From a founder’s perspective, ICO is a win-win. Founders have access to fast cash own their own terms, instead of going through a lengthy fundraising process and giving up equity to angels or VCs on their terms. Startups are no longer limited on how much they can raise because of their geography. They can raise enough money to compete with companies that are fundraising in Silicon Valley, New York, London or in other big startup ecosystems with lots of available venture capital. People using the network, the ones creating the value, now have a stake in the project. ICOs combine efficient ways to raise money, build a motivated community and give people a sense of ownership.

But then just like in in the 90’s, when an IPO was more important than profits and was the primary goal of all the stakeholders involved, it just looks to me like too many ICOs have one goal in mind.: how to raise as much money as quickly as possible, overstating a promise and not necessarily building a product. In many cases, they don’t even have a product, they just publish a white paper. Doesn’t sound to you like someone with an idea raising millions? Isn’t that what happened in the nineties and then the bubble popped.

We are now, predictably, seeing traditional funding rounds dressed up as ICOs. These are mostly not scams (some are). Some are good ideas and have good MVP implementations (some are not). The point is that the ICO label is now just a marketing buzzword. In these hyper-speed times, we reached the top of the hype roller coaster in only a matter of weeks.

Yet ICOs are exciting and have real sustainable value if done right. They have all the makings and possibilities to truly drive faster innovation on a global scale. Even though big VC firms, like Andreessen Horowitz and Union Square Ventures, have backed some cryptocurrency hedge funds, traditional investors have stayed away. They have stayed away because because they lack regulations, they have high valuations, over-capitalization and lack of control over financials.

ICOs have a lot of similarities to  securities, but they are also very different. Most ICO’s don’t actually offer equity in startup ventures, instead they only offer discounts on cryptocurrencies before they hit the exchanges. They are global, funded by bitcoin, ether and other cryptocurrencies, not controlled by any central authority or bank.

The ICO trend is still in its infancy, and just like Internet changed everything, ICOs can do the same exact thing. But, real value needs to come out these projects and solve everyday problems of the users that make up their networks. A bubble market can only create bubble companies. ICO will become what we allow it to be. We can only hope that regulators and the community will define a set of rules so it does not turn into a bubble.

Opinion: Bitcoin is tumbling

What a week its been. With the price going as high as $3,016.30 on Monday and dipping as low as $2,207.77 on Thursday its been a roller coster for Bitcoin and all of us. Then it bounced back. Pity the poor financial journalists who have quickly come up with explanations for the price change and their explanation is often made irrelevant by the time they hit post.

Crypto is a 24/7/365 market. So is FX. However FX does not have 10% daily mood swings on a regular basis. Nor do you have to understand nuances around how exchanges and miners work.

But why is the price fluctuating? Well, there has been a lot of talk about Bitmain’s threat to hard fork. Fork that!

Market sentiment is usually bearish or bullish. When bears are in control, prices go down and when bulls are in control, prices are going up. Markets are driven by sentiment and that’s not always synonymous with value.

This week, almost all the cryptocurrencies experienced lows, so it could be a market correction which happens in financial markets.

In the past, Bitcoin was traded only by the people who have been dealing with cryptocurrencies. This year, regular people started to join, making trading volatile. I don’t think most regular people understand anything about forks and segwit or whether Bitcoin should be viewed as finite digital gold or unlimited digital cash. What they do understand, is sentiment. A “fork just doesn’t sound like a good thing.

Any digital currency at its early stage will experience volatility and fluctuation. We can expect Bitcoin’s price to continue to fluctuate in weeks to come. When you buy Bitcoin, you’re buying a share of BTC blockchain. Blockchain is at a very early stage., but at some point over the next few years, companies and governments will be trading in blockchain.

In the long run, the price can only go up.

Ilias Louis Hatzis is a Blockchain entrepreneur who writes the Blockchain Bitcoin & Crypto (BBC) Weekly CXO Briefing each Monday.

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Wrap of Week #23: Ethereum mining and more, SparkUp, Hive, Insurtech, IRTA & Watson

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