Dr Timothy King from the Kent Business School comments on the 10th anniversary of Bitcoin and the excitement and concerns that exist around the cryptocurrency.
‘Bitcoin is the first, and by far the largest and best known of the cryptocurrencies, with a current market capitalisation of $111 billion USD. By comparison, the second largest is Ethereum with a market capitalisation of $21 billion USD. Bitcoin first traded on the 3rd January of 2009 and it, along with the underlying Blockchain technology, was developed by Satoshi Nakamoto – most likely a pseudonym for a group of cryptographers. Since the inception of Bitcoin, cryptocurrency markets have witnessed staggering growth but also dramatic and sudden falls in value.
‘In early 2019 Bitcoin will celebrate its tenth anniversary for an actual trade. Since its sudden emergence in early 2009, this (and other) cryptocurrencies have captured widespread attention of investors, the media and policy makers alike on an almost unprecedented scale. From a policy perspective, whilst cryptocurrencies have many exciting features, they are also a major source of concern for regulators worldwide. Indeed, much of the recent attention has been from regulatory bodies and policy makers who have expressed extreme caution to investors seeking to invest in Bitcoin and other cryptocurrencies.
‘For instance, the European Supervisory Authorities (ESAs) view cryptocurrencies as “highly risky and unregulated products unsuitable as an investment, savings or retirement planning products” and in February 2018 issued a warning to consumers citing bubbles, extreme volatility and lack of regulatory protection. Similarly, current General Manager of the Bank for International Settlements (BIS), Agustín Carstens, describes cryptocurrencies as a “combination of a bubble, a Ponzi scheme and an environmental disaster”.
‘What the next decade will hold for Bitcoin is very much uncertain. Key questions pertain to whether cryptocurrencies will become readily accepted as means of payments and whether they could eventually displace some traditional fiat currencies. Many commentators are highly sceptical of these possibilities. Whatever the future holds for cryptocurrencies, one thing for certain is we are in for an exciting ride.’
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