Fintech A.M.: 28-12-17

Fintech A.M.: 28-12-17

Speculations on the direction of bitcoin have heated up over the last two weeks as strong fluctuations in its value and that of other cryptocurrencies have garnered broad attention. Making a useful statement on the value of bitcoin seems to be nigh impossible, although it remains important to try and grasp the fundamental value behind the coin.

Summarized by Penny Crosman, bitcoin is either seen as a bubble, a fraud, a commodity or a digital currency. When bitcoin can be used as a viable method of payment or as a vehicle to store value, much akin gold, it can have some form of fundamental value for either users, investors or both. If it doesn’t, things “won’t end well,” according to JPMorgan CEO Jamie Diamond. The coin can be seen as a fraud and diminish in value when everybody tries to sell their position at the same time. The same could probably happen if enough people believe the current valuation to be a bubble.

Either way, regulators in the EU have not shown strong enthusiasm to embrace bitcoin. Pierre Moscovici, European Union Commissioner for economic, financial affairs, taxation and customs, revealed the position of the Commission on EU-wide bitcoin regulations. “We (the Commission) looked at that (bitcoin), we analysed the fundamentals but we don’t think we have to react at this stage as a political and technical body,” according to Moscovici. Regulatory changes however often show a great deal of inertia, while it will probably be investors and companies using cryptocurrencies as a platform who decide what will happen next.

With banks ramping up their fintech related investments in 2018 and VCs injecting large swaths of cash into the startup economy, it’s interesting to observe whether bitcoin related firms will receive a piece of the pie. Modernization seems the premiere focus for banks, with the usual suspects of blockchain, artificial intelligence and consumer products being their main investment targets. Nonetheless, crypto platforms like Waves are also quickly expanding their services and customer base, with ICOs breaking records every other month. 2018 is shaping up to become an interesting year.

By Lars van den Enk, Research Analyst at Holland FinTech

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