The rise of the digital currency

Despite its name, cryptocurrency isn’t just money. It could also be debt or equity and so it should be regulated and taxed in the same way as other finance. The tokens investors get when they buy a cryptocurrency, like Bitcoin, can be used to buy into  blockchain  startups (businesses that use the same online ledger as cryptocurrencies). When blockchain startups issue shares in their businesses using cryptocurrency, it’s called an initial coin offering. For investors, this is like any other equity investment. Cryptocurrency can also be used to finance specific assets, like debt. So what we have is a single financial instrument that has the advantages of both debt  and  equity. So startups issuing their own tokens for investment purposes should have to comply with the same rules and regulations that startups issuing more traditional instruments must comply with. Cryptocurrency investors should be taxed on the same basis as traditional investors. Why ...

Word that South Africa's second-largest supermarket might accept bitcoin sent twitters of excitement through the cryptocurrency community last week – that is, until it emerged that, actually, they weren't going to. At least not yet, and probably not for a while, if ever. In a prime example of rapid reporting, headlines proclaiming mainstream adoption (in supermarket aisles at least) jumbled up the news. Pick n Pay was  testing  bitcoin acceptance,  not rolling it out  across its network. In an interview with  BusinessDay , the chain's deputy CEO Richard van Rensburg highlighted two interesting points that paint a much bigger picture. One is that the authorities have yet to establish a regulatory framework to manage cryptocurrency risks. This is true for most jurisdictions. Earlier this year, Japan  passed a law  that recognized bitcoin as a legal method of payment. Since then, several large retailers in the country  have announced ...

The trading of digital currencies is bursting as well as poised to overtake a tech giant Apple. According to Exante Data founder and CEO Jens Nordvig, the trading volume of Bitcoin, Ethereum, and other cryptocurrencies could surpass Apple soon. The analyst said that the cryptocurrency market is exploding, and global trading will soon surpass the tech giant. Will Cryptocurrencies trading volume surpass Apple? The surge in Bitcoin and Ethereum prices has led to a massive influx of traders and investors. They all are seeking to participate in the financial boom. In fact, the volume has increased more than eight times this year. Nordvig said: “Cryptocurrency trading volume is now more than of $3 bln per day on average. And will likely soon surpass that of the world’s most liquid stock: Apple ($4 bln/day).” The large drop in stock trading volumes has coupled with the massive growth in cryptocurrency trading volumes. The daily US stocks trading volume hit a ...

In recent months, news about Bitcoin   being widely purchased and mined in   Venezuela   has led to a number of rumors regarding the growth and demand of the cryptocurrency there. An interview with Daniel Osorio of Andean Capital Advisors on CNBC indicates that the country may soon ‘Bitcoinize’ completely. Osorio, who spends about a week per month in the South American country, was interviewed regarding the  hyperinflation  problems that Venezuelans are facing. During the interview, he explained that a simple lunch costs upward of 200,000  Bolivars , or about $8-$10. Bitcoin only In order to pay for lunch,  locals  are beginning to accept only Bitcoin or money wires of foreign currencies. The problem, according to Osorio, is that unlike Zimbabwe and other nations where hyperinflation has taken its toll, Venezuela does not have access to enough dollars to manage the economy. Locals have, therefore, turned completely to Bitcoin in ord...

Popular Bitcoin platform Luno has completed a $9m (£6.7m) Series B funding round, led by London-based Balderton Capital , and is expanding into 35 new markets across Europe. New investors AlphaCode and existing investors Digital Currency Group also participated in the round. This follows Luno's $4m Series A round, which was led by emerging market tech giant Naspers . Luno currently comprises a team of over 70 and has offices in London, Singapore and Cape Town. Luno co-founder and CEO Marcus Swanepoel said: "We're excited to partner with Balderton as we accelerate our business across Europe and the rest of the world. "In Europe we've seen an unprecedented demand, not just for digital currency, but also for our high-quality, secure and very user friendly products, in particular the Luno mobile apps. Enabling more people in Europe to have access to these products and services is a critical part of our mission to bring digital currencies to everyone, everywh...

Bitcoin's appeal is that it operates independently of any central bank. As such, it is seen as heralding a new age of global payments. Bitcoin comprises just under half of the $100-billion cryptocurrency universe.  Blockchain, the technology behind Bitcoin, is, in our view, a far more powerful platform than Bitcoin itself. A specialist in financial technology said on question-and-answer website Quora: “Blockchain technology creates a decentralised digital public record of transactions that is secure, anonymous, tamper-proof and unchangeable. Instead of a bank or other intermediary maintaining a private database of records, blockchain technology makes all records public.”  But how should Bitcoin be valued? If we assume that Bitcoin is a currency, we would try to ascertain its long-term fair value by using various models: relative purchasing power parity, inflation differentials or interest rate differentials. But these values are impossible to ascertai...

TOO BIG TO FAIL The financial crisis of the late 2000s had the potential to cripple the nation. Big banks played a major role in that economic disaster, and many ended up paying fines for facilitating the conditions that lead up to the crash in 2008. So, when big banking executives start calling  cryptocurrencies   corrupt schemes , the accusations raise a few eyebrows. Last week, JP Morgan CEO James Dimon  leveled several criticisms  at the original cryptocurrency,  bitcoin , calling it a “fraud,” saying it’s “just not a real thing,” and claiming that “eventually it will be closed.” While Dimon is not the first to  criticize crypto , his assertions are particularly noteworthy given his own company’s past transgressions. Not only has JP Morgan been fined billions of dollars for their role in the financial crisis, they have also been fined for a slew of other corrupt and illegal practices both before and since. The bank seems par...

When JPMorgan Chase CEO Jamie Dimon described the digital currency  Bitcoin recently as a fraud , he was roundly criticized. Cryptocurrency aficionados, convinced that Bitcoin’s underlying blockchain technology represents the future of financial services, compared him to a buggy-whip manufacturer dismissing the automobile. Furthermore, what gave the head of a bank bailed out by the government in 2008 the right to warn about risky new investments?   As a business professor who studies emerging technologies, I’ve watched many similar debates. Incumbents often fail to appreciate major innovations. It’s also easy to take pot shots at established firms for moving too slowly. Yet, the reverse is also true. Successful companies and their leaders don’t get that way by ignoring the world around them, and true believers in technological disruption too easily assume that everything will change overnight. Much of what Dimon said was ill-informed. The fact that Bitcoin and other cr...

Some experts think that Bitcoin is the “people’s currency,” destined to replace national currencies, one day. Others think the digital currency a “fraud” and a “tulip bulb.” What does the average American know and think about Bitcoin? Some Americans never heard of it. Others heard of it, but they either think it is illegal or they are unsure about its legality. And only a small fraction had ever owned the digital currency—mostly the younger generations. That’s according to a just published  survey  by LendEDU. This means that Bitcoin has a long way to go before it crosses the “tipping point,” from being an exotic product for “innovators and “early adopters” to a currency for the mass market. Meanwhile, Bitcoin has been driving cryptocurrencies sharply higher over the last twenty-four hours higher, crossing the $4,000 mark, again. Coin % 24H % 7d Bitcoin (BTC) 12.78 -3.84 Ethereum (ETH) 18.37 -0.80 Litecoin (LTC) 11.51 -18.10 *As of Saturday September 18, ...

Bitcoin fell like a rock last week as many speculators in the cryptocurrency decided to book profits and head to the sidelines after JPMorgan Chase CEO Jamie Dimon warned about the dangers of Bitcoin, saying "It's worse than tulip bulbs. It won't end well. Someone is going to get killed." He even said the cryptocurrency "is a fraud." The virtual currency was also pressured by the decision by Chinese authorities to crackdown on the digital currency. Last week's plunge came after Beijing ordered cryptocurrency exchanges to stop trading and block new registrations, due to fears that increasing number of customers piling into the market could lead to a string of wider financial problems. "All trading exchanges must by midnight of 15 September publish a notice to make clear when they will stop all cryptocurrency trading and announce a stop to new user registrations," the government notice said, according to Chinese state newspaper Securities Ti...

Developers at some of the top tech companies have created a browser API that could soon make it easier to buy goods and services online with cryptocurrency. The work, started by the World Wide Web Consortium (W3C) with the help of Microsoft, Google, Facebook, Apple and Mozilla, is a tangible step forward for a currency-agnostic web payment standard  first conceived  in 2013. Equally, as bitcoin and other cryptocurrencies gain more momentum, the launch signifies the growing recognition of cryptocurrency as a payments technology. Indeed, the W3C has gotten more interested in blockchain technologies over the years, hosting its  first ever blockchain workshop  in June last year. But while participants were left with interest in standardizing and democratizing the technology's use, no formal work was decided upon then. That, however, has changed. Announced on Thursday, the API is currently  being implemented  in browsers including...