Blockchain Bitcoin & Crypto Weekly CXO Briefing for week starting 8th May 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 offer one expert opinion.

For the introduction and index to weekly posts please go here.

 

News Item 1:  Price above $1500 plus volatility and rising tide lifts all crypto boats

Decrypted: Last week we reported an all-time high of $1,300. Now we have another one. Last week said that this matters because “the Bitcoin price drives interest in this sector.” This is still true. After hitting an all-time high of $1589 this week, the price dropped $100. This is the volatility that traders crave. Most trading sites also highlight that a rising tide lifts all crypto boats, with many altcoins also hitting record highs.

Our take:   This is the same story this week, but what is interesting this week is the reason for the price rise selected by mainstream investing sites such as Market Week is the increasingly positive tone of regulators worldwide, a trend we have been reporting on for some time (e.g. in Switzerland, Japan, Malta). The elephant in the room is the USA. What the Trump administration will do about Bitcoin is far too hard to forecast, but we do know that it will be hugely significant and with the rest of the developed world getting more comfortable with Bitcoin we believe it will have to crowd its way into the US regulators priorities.

Our take on altcoin trading is that this is not for faint of heart. You need to be comfortable with wild volatility, 24/7 trading and exchanges where you can lose all your principle. Some people do well with this. As a more fundamentally oriented investor I find Altcoins, with the exception of Ether, a tough proposition.

The $1500 price also coincided with a market cap of $40 billion. This is similar to the market cap of Uber. Which would you prefer to own? Actually that is academic. You and I cannot buy Uber (I would not want to at current prices) but we can buy Bitcoin. This is a disruption that Josephine Q Public can invest in or trade in.

News Item 2: Ransomeware use case.

Decrypted: Your data can be hacked and then you can be held to ransom (aka “datanappers”). That is hardly news. This catches the news only because it is not a big company or a government being hacked. It is the kind of small business we can all identify with. What is significant for the BBC community, is that the method of payment demand by the datanappers is a cyber currency.

Our take: The knee jerk reaction of crypto fans is “you don’t ban dollar bills because a kidnapper demands payment in dollar bills”. That is true, but there is something more significant going on here that is rather scary. The best chance of catching anybody demanding a ransom is during the physical cash hand-over. If the criminals use a truly anonymous cyber currency (probably not Bitcoin), that risk goes away for the criminals. That makes hacking crime a much better business and that is really bad for the rest of us.

So our knee jerk reaction is to tell our governments to “do something about this”. The problem is, what can governments actually do about it? Let’s say all major governments agreed to ban bitcoin and all altcoins. That is nigh on impossible, but posit for now that it was possible. Do you think the criminals would pay any attention to those laws? What criminals do is break the law and try not to get caught. The only way to stop this would be if all major governments agreed to ban the Internet.

News Item 3: Jack Ma-Backed Tech Firm Invests in Blockchain Startup Symbiont

Decrypted: A Chinese company called Hundsun Technologies, which is backed by Jack Ma of Alibaba fame invested an undisclosed sum in a US blockchain technology startup called Symbiont, which had previously raised $1.25 million. The PR talks about a partnership where Hundsun will bring Symbiont’s smart contract software to its Chinese customer base.

Our Take: In short, access to market was the key and an investment was the icing on the cake. You can read this in two ways:

  • The Chinese money buying into tech startups is like Japanese money in the 1990s and we all know how that story ends. In that screen play, the Chinese don’t understand what Blockchain really is and are just buying into hype.

 

  • This time is different. Despite the “this time is different” stories usually ending badly, I think this is the more likely scenario. This is not about easy money in China, because we have easy money conditions globally. Nor with an entrepreneur as savvy as Jack Ma can the “sucker at the table” scenario carry much weight. This is about growth in China and growth is the prize that the rest of the world is searching for. For more on our China coverage please go here.

Opinion: Bitcoin Bubble? – Hell NO!!!

This a long and sometimes rambling and technically dense market analyst view on YouTube. I selected it despite these presentational shortcomings because the creator – Tone Vays – is an excellent analyst who really understands both how markets work and how bitcoin, blockchain and crypto works.

He mixes technical charting analysis with fundamental analysis. His take is that both technical and fundamentals signal a bull case for bitcoin. Now that enough people are trading bitcoin, chart analysis is worth doing. On a fundamental basis, he is pro Segwit and sees many altcoins as scams and when they pop the money will flow into bitcoin. Disclosure: I link to opinions I agree with.

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

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