Few assets have attracted as much support
AND criticism as cryptocurrencies. Are they just a fad? Or are they the future?
With Facebook recently announcing the launch of its own digital currency and market-leader
Bitcoin hitting 15-month highs in June, cryptocurrencies are back in the spotlight.
But the truth is they never really left the stage.
Big names in business such as Microsoft and newegg, the online retailer, accept payments
in Bitcoins. The Australian Stock Exchange is even working
on a settlements system based on cryptocurrencies’ underlying technology – blockchain.
Meanwhile, the rise Ripple, prized for its quick and cheap transaction speeds or Ethereum,
which has its own internal tokens, have helped gain cryptos some fans.
While some argue Facebook’s proposed Libra is not a true cryptocurrency because of the
limited pool of processing groups behind it, there are now more than 2,300 digital currencies
traded. But they certainly have a long way to go before
they gain true mass appeal. One reason is volatility, which can be a trader’s
friend but can deter others. Second is security, with numerous reports
of digital thieves hacking into e-wallets and digital-currency exchanges.
Perhaps the biggest concern, though, is regulation. Some countries have effectively banned cryptocurrencies.
Meanwhile the US authorities have delayed decisions on approving digital-currency exchange-traded
funds[a]. While regulation may prove an essential ingredient
for crypto to move fully to the mainstream, cryptocurrencies and the blockchain technology
that supports them can play an important role in providing seamless, cross-border transactions,
in a world dominated by global online retailers and service providers.
Plus, as digital currencies are decoupled from the wider economy they can also act as
safe havens in times of market turmoil. And just as cannabis and other new industries
offer investors risks but also opportunities, more are seeing potential value in holding
cryptocurrencies as part of a wider and diversified portfolio. [a]Show this is the SEC