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.

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

News Item 1: Bitcoin Falls 3.5% Post SegWit Victory, Community Figures Continue Arguing

Decrypted: On August 9, the highly-anticipated Segregated Witness (SegWit), a solution to Bitcoin’s scaling issue, was officially locked in on block 479,707. The prolonged debate between different miners and developers resulted in the adoption of Bitcoin improvement proposal BIP 91.

SegWit, the brainchild of developer Peter Wuille, isn’t expected to activate until August 21. It paves the way to solve Bitcoin’s scaling issue. Right now the Bitcoin network can only manage a few transactions per second. SegWit essentially increases transaction capacity and makes it even harder to manipulate unconfirmed transactions.

Our take: Not everybody agrees on Bitcoin’s future. Governance is a huge issue in the Blockchain community, yet its amazing to see Bitcoin developers coming together to create SegWit and offer a possible solution to Bitcoin’s scaling issue.

But the continued debate has cast a shadow of uncertainty, especially when on August 1 a group of developers and miners split the blockchain and created a new digital currency called Bitcoin Cash (BCH).

So far, Bitcoin survived the fork without a major price catastrophe. Bitcoin’s price is maintaining an upward trend, despite the appearance of Bitcoin Cash. The market capitalization of Bitcoin Cash is under one tenth of Bitcoin. After Bitcoin’s (BTC) price bottomed out at $2,643 on August 1st, Bitcoin rallied more than 30% before reaching a record high near $3,500, as a result to Tuesday’s BIP 91 upgrade. The record marked an increase of 264 percent year-to-date, after months of community dispute in the world of cryptocurrency.

The activation of SegWit represents the first major milestone for scaling Bitcoin and it looks like its clearing the way for higher prices in the future. Another factor driving Bitcoin’s price is rising demand from institutional investors. This week, CBOE, the largest options exchange in the US, announced that it will integrate Bitcoin futures contracts and options on its trading platform by partnering with regulated Bitcoin exchange Gemini.

SegWit lays the foundation to establish the necessary infrastructure for solutions like the Lightning Network. The implementation of the Lightning Network will further scale the Bitcoin network by enabling micro-payments and applications. Lightning adds a layer on top of Blockchain and allows instant clearing, letting users instantly withdraw, deposit, send Bitcoin to someone and build apps. One of the most important features the Lightning Network offers is the ability to transfer value between blockchain networks without the need for an exchange or a trusted central party.

It’s possible that we are in one of Bitcoin’s last bubble cycles before mass adoption. According to analysis by Dennis Porto, a Bitcoin investor and Harvard academic, Bitcoin’s price could hit $100,000 by February 2021, if it continues to follow one of tech’s golden rules, Moore’s law.

Bitcoin is rapidly coming into its own. Leading economies around the world are seeing a major increase in Bitcoin’s adoption and most importantly, the market is demonstrating confidence in Bitcoin.

News Item 2: Medical Society of Delaware to Pilot Blockchain Technology for Better Healthcare Access

Decrypted: The volume of patient data managed by hospitals, doctors, and insurance companies increases each year. How can organizations securely and quickly share information and allow each party verify the data is correct?

The Medical Society of Delaware teamed up with healthcare services company Medscient to develop a solution to address the challenges that authorization requirements pose to patients and healthcare providers.

But Delaware is not the only state experimenting with blockchain to tackle some the challenges in the healthcare industry.

The State of Illinois will use blockchain to improve the efficiency and accuracy of the state’s medical credentialing process, potentially making it easier to verify medical licenses are valid across state lines. The Illinois Blockchain Initiative’s new pilot program, in collaboration with Hashed Health, will leverage blockchain and distributed ledger technologies to streamline the sharing of medical credential data and smart contracts.

Arizona has passed a law in March that would expand the definition of an electronic record to include those hashed or stored on a blockchain system.

Our take: The healthcare industry, especially in the United States, is a complex system of interconnected entities. As 54% of Americans are dissatisfied with a healthcare industry, the U.S. healthcare system is at a crossroads. Since Obamacare was passed in 2009, the US healthcare system has continued to struggle with the increased spending, inefficiencies and antiquated systems.

President Trump and the Republican party struggle with rejection to repeal Obamacare, while massive issues continue to challenge the U.S. healthcare system: fraud, waste and abuse.

According to a report from the Department of Health and Human Services and the Department of Justice’s Health Care Fraud and Abuse Program (HCFAP), the federal government recaptured over $3.3 billion in healthcare fraud judgments and settlements, along with administrative actions, in the fiscal year of 2016. Since this initiative was established in 1997, HCFAP has recovered over $31 billion, with over $18 billion of that recovered since 2009.

Lack of interoperability between healthcare providers costs 150,000 lives and $18.6 billion per year, according to the Premier Healthcare Alliance.

Conceptually, blockchain applications can benefit the healthcare ecosystem as a whole. Blockchain technology has the potential to transform health care, especially when it comes to medical records, sharing patient information, security, privacy and making data more interoperable. The elimination of third-party entities and middlemen would reduce administrative costs and increase efficiencies in claims processing. The distributed ledger and built-in authentication controls lower the risk of data theft and fraud.

The federal government and the Department of Health and Human Services (HHS) is already doing something about it. The HHS Blockchain Challenge gathered more than 70 submissions of academic papers on blockchain usage in health IT and health-related research, announcing 15 winners, spanning organizations including Deloitte, IBM, MIT (MedRec was one of the winners), and The Mayo Clinic. The winners, who presented to the HHS for possible development and implementation, proposed blockchain solutions for everything from health insurance claims and payments to data interoperability and Medicaid applications.

MedRec is a solution developed by graduate students at MIT, using the Ethereum blockchain, to serve a digital family history of medical records.. It acts as an interface between multiple institutions’ health records. It allows the patient to grant access to their medical records securely to their healthcare provider. Think about sitting down in a doctor’s office and being asked your family medical history for a certain illness. You might have no idea of the answer. But with MedRec blockchain, families and medical providers can create a shared medical history that can be passed from generation to generation. All the real-time health data collected by wearables and fitness trackers and even apps like Apple Health. MedRec is also exploring the possibility of using blockchain to give doctors and hospitals access to that data, at the patient’s consent.

As the cost of healthcare delivery continues to increase rapidly, blockchain has a huge potential to become the next big innovation engine and provide answers to challenges facing this medical industry.

News Item 3: Ukraine’s Central Bank Moves Closer to Cryptocurrency Regulation

Decrypted: In a recent announcement the National Bank of Ukraine indicated that its set to soon discuss how it should regulate cryptocurrencies. The decision comes at a time when Ukraine has seen increased Bitcoin activity. Today Bitcoin does not have concrete legal status in Ukraine. Due to regulatory uncertainty, recently local law enforcement arrested several suspects that allegedly set up 200 computers to mine Bitcoins within a state institute in Kiev.

While in different countries Bitcoin is classified in differently, ranging from virtual currency, money substitute, intangible value, virtual commodity and other things, the NBU has not taken a official position up to now.

Our take: Ukrainians have been passionate about cryptocurrencies. The Ukrainian national economy and its currency have suffered greatly from the armed conflict with ethnic Russian separatists. which would explain the high interest in alternative ways to protect wealth. Many of the country’s citizens use Bitcoin as a hedge against extreme inflation and an unstable Ukrainian hryvnia, which has lost 80% of its value because of continued instability.

Since 2014, nearly 5,000 BNK-24 ATM terminals nationwide began offering the option to buy Bitcoins for cash as effortlessly as one would conduct any other automated banking transaction. The Kuna Cryptocurrency Exchange announced that they have plans to install 150 Bitcoin automated teller machines (BTM) in 2017.

Earlier this year, Ukraine partnered with the Bitfury to put a sweeping range of government data on a blockchain platform. The government is working with Bitfury to create an eGovernance solution on the Blockchain. The main areas of partnership include the use of Blockchain in state registers, public services, social security, public health and the energy sector.

For quite some time, the National Bank of Ukraine has been considering using blockchain for the implementation of cashless economy. In 2016, it unveiled a roadmap to use blockchain or distributed ledger technology in the country to facilitate a cashless economy. According to the roadmap, the central bank would issue e-money which would serve as the cashless payment instrument and to create an alternative to card payments.

During 2016, the average investment volume reached US$92,000 per week. Even though the volume is small when compared to other countries, its especially promising when compared to previous all-time high of US$18,400.

But, one of the biggest contributing factors to Bitcoin’s success in the country, is the initiative taken by the Ukrainian Exchange. Ukraine is the first regulated market in the world to offer futures on Bitcoin contracts.

Undoubtedly, Ukraine’s blockchain initiatives underscore a growing trend among governments that have adopted the technology to increase efficiencies and improve transparency.

Opinion: Bitcoin “Has No Intrinsic Value” But Neither Does Fiat

The question of intrinsic value has haunted Bitcoin since its inception. Recent developments, have brought the question to the forefront again. When Bitcoin forked last week into two distinct cryptocurrencies, Bitcoin (BTC) and Bitcoin Cash (BCH), uncertainty flooded the market. Yet, over the weekend, Bitcoin’s price climbed to over $4,000, for the first time since the cryptocurrency was created in January 2009.

Despite the rising demand for Bitcoin, economists like Howard Marks, who manages $90 billion at Oaktree Capital, believe that cryptocurrencies don’t have a value and he’s gone so far as to say that its just a fad.

“Digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.”

But, why do people value Bitcoin?

The answer to this question lies in basic economics: scarcity, utility, supply and demand. The financial value of an asset is a reflection of supply and demand. The demand for a currency is fueled by its utility. Assuming there is some demand, the price, in other words the value, of a currency is determined by its supply. The more scarce a currency is, the more valuable it is.

Like gold, Bitcoin is scarce. Its supply is limited. Currently just over 16.5 million Bitcoin are in circulation and the maximum is at 21 million Bitcoins. This set cap is well known, making its scarcity transparent.

However, to have value, Bitcoin must also be useful. Bitcoin is fast, borderless and decentralized.  Not only does it have value as a payment system, but also a store of wealth. It’s built on open protocols, that allow anyone to innovate on top of Bitcoin and improve it.

The argument that Bitcoin doesn’t have any intrinsic value, is a weak argument. Figuring out value is a complex task. Most modern paper currencies, fiat currencies, have no intrinsic value. The value of fiat money is no longer linked to physical commodities such as gold or silver.

The intrinsic value fiat money is based solely on the faith and credit of the economy. Fiat money derives its value from the faith people put in them.

People believe in Bitcoin because it transcends nations, politics, religions, cultures and regulations. It requires no trust, it can’t be counterfeit. It allows movement across borders. It can be spent without a bank account, credit report, identification, and other permissions. It provides a global and universal wallet. It represents economic freedom.

Bitcoin has intrinsic value, because people believe in Bitcoin.

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

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