Today I want to remind you that bitcoin isn’t dead.
In fact, there are signs that the 2020s could be a very big decade for crypto indeed.
‘I’ve heard that before,’ you might think.
And while I can understand and appreciate some level of scepticism on this front, I’d ask you to look at the evidence with an open mind.
As the old saying goes, actions speak louder than words.
Which makes these latest developments all very interesting…
In their recently released Imagine 2030 report, Germany’s oldest bank, Deutsche Bank, stated cryptocurrencies could end up replacing ‘normal’ money over the next decade.
As reported in The Block:
‘The current fiat system looks “fragile,” particularly because of “decades of low labor costs” and inflation. Over the next decade, things could change and “demand for alternative currencies, from gold to crypto, could take off.”’
The same economic arguments for gold can be used for certain cryptocurrencies like bitcoin.
But to my mind crypto as a whole is a lot more interesting than gold.
They have a technological aspect that you don’t see in gold. And as a technology, crypto is still developing. No one quite knows how it will work out.
In the below chart you can see this is something that happened with the internet too.
Source: Deutsche Bank
And we know how that turned out…
Another piece of German news last week made me think there was more of a concerted effort here by Germany to take the lead in a crypto-led future.
You see, Germany’s parliament have just passed new laws which will make it legal for banks to hold and directly sell cryptocurrencies.
The bill has passed both houses of parliament and is due to become law on 1 January 2020:
‘Sven Hildebrandt, head of the consulting firm DLC, welcomed the news, telling the Handelsblatt: “Germany is well on its way to becoming a crypto-heaven. The German legislator is playing a pioneering role in the regulation of [crypto assets].”’
It’s not just Germany either…
It was reported last week in Reuters, that Dutch banking giant ING was working on a digital assets custody solution too.
This certainly isn’t what you’d expect to see in a dying industry — as the critics claim crypto is.
More like the opening salvos as the battle for crypto dominance heats up…
War for crypto
‘Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.’
Sun Tzu, The Art of War
Elsewhere, another big government is making silent moves to stake their claim in the war for crypto dominance.
In October, China backflipped on a previous position banning cryptocurrencies. This caused great excitement in China’s huge bitcoin mining industry — a field where the Chinese dominate.
As reported in the South China Morning Post:
‘After Xi’s blockchain speech, the government of Sichuan, which is China’s largest producer of hydropower, organised a meeting of large cryptocurrency mining operators to explore how they could take advantage of the province’s excess electricity supply to turn the industry into a major component of the local economy.’
China also has plans to launch its own digital currency very soon.
It’s all part of a grand strategy to thwart US control over China’s currency and economy.
As reported in Fortune magazine:
‘A PBOC-issued digital currency would let the government retain control of the money supply and monitor and regulate capital distribution. It would also function as a safeguard against a border-hopping Libra, which lies outside government regulation and which would struggle to gain traction if the PBOC currency, “DCEP” (digital currency electronic payment), was already in widespread use.
‘“Currency is just one—albeit very large—power proxy struggle between the two giant powers,” Wasyl says.’
It’s about to get very, very interesting
It’s clear that the world’s big powers are starting to see how powerful cryptocurrencies will be. And they’re making silent moves to claim their stake.
But here’s the really important thing.
It’s not for China, the US or Germany to win. That’s the beauty of decentralisation.
In my opinion, decentralised systems of money are a human right as important as any other.
By holding some Bitcoin [BTC], you’re literally a part of this fight for freedom. And in my opinion, you’re on the right side of history.
Putting ideology aside, the timing to start taking an interest in crypto couldn’t be better.
The best description of crypto I’ve heard is this:
‘Crypto is an economic revolution wrapped up in a get-rich quick scheme.’
Not that anyone thinks they can get rich from crypto these days.
Right now, sentiment is down for cryptocurrencies in the mainstream. Just as the big players are making their moves.
To me, that smells like opportunity…
Editor, Money Morning