By Shae Russell – Markets & Money
Cryptocurrencies are ruffling feathers at the moment.
It may have something to do with the US$1.6 billion in initial coin offerings (ICOs) in the past year.
It may have something to do with the most well-known cryptocurrency, Bitcoin, gaining 333% since January this year.
It may have something to do with what The Age labels ‘hard money enthusiasts’.
It may have something to do with the ‘profusion and untested concepts [that] has spurred talk of a bubble’, as Bloomberg explained on Sunday.
Or it may have to do with the fact that the greatest monetary disruption in our lifetime has fallen into our lap. And that it’s unsettling the people that control the money supply.
The pervasive mistrust of cryptocurrencies is coming from short-sighted governments and central banks that fear what they can’t control. And it doesn’t help that the media is towing the government line.
An Australian-based start-up launched its own cryptocurrency last week, and The Age couldn’t help but point out all the things ‘wrong’ with cryptocurrencies, writing:
‘This week a Perth-based energy trading start-up called Power Ledger said it raised $17 million from speculators and crypto enthusiasts in Australia’s first ICO (initial coin offering). An ICO is a bit like an IPO, except digital tokens created from thin air are up for grabs, rather than small pieces of ownership in a business. There are no regulators or stock exchanges involved.’
What bothers me most about this isn’t the lack of regulators or exchanges involved. It’s pointing out that digital tokens are created from ‘thin air’.
While that’s true, the mainstream doesn’t bother to point this out about banks. Banks essentially create money out of thin air too. Yet you don’t see the media pointing that out often.
I’ve never seen them take the time to remind us that the billions in dollars of banking profits that shareholders love to see come from loans made out of thin air.
You know why? Because it’s what they know. It’s much easier to stick by what has always been, and pick out the faults of the new.
The Age continues:
‘To describe ICOs as the wild west of finance would be an understatement but, at the moment, lots of people are making a killing from them.
‘Bitcoin also appeals to anyone seeking to move money across borders (relatively) anonymously. This includes — but is not limited to — money launderers, drug dealers and other criminals.
‘Because it can’t be easily manipulated by central banks or governments, Bitcoin initially found favour among “hard money” enthusiasts, who worry that an ever-expanding money supply will eventually trigger a financial crisis.’
To their credit, at least The Age did mention that people who fear endless money creation are flocking to bitcoin.
For years, the hard-money enthusiasts were the gold and silver bugs. The people who supported something that had been money for millennia. Gold and silver are favoured by hard-money types because powerful elites can’t fiddle with the supply.
And initially, that’s where bitcoin found its support.
However, why is the anonymity of cryptocurrencies now an issue? I don’t know many people that go around bragging about how much money is or isn’t in their bank account.
More importantly, rather than just saying that people like the anonymous nature of cryptocurrencies, they instead tell you that money launderers, drug dealers and other criminals use cryptos.
Few people truly ‘get’ what this cryptocurrency boom is all about. While I have no doubt there are charlatans out there looking to make a quick buck, there’s a much bigger story behind it. As Sam Volkering, editor of Secret Crypto Network, told me recently, ‘Revolutions don’t take a few months or a year, they take a generation or more. We’re still right at the start of it all.’
Bitcoin and other cryptocurrencies aren’t going away. And they aren’t the domain of money launderers, thieves and drug dealers. Cryptos are a legitimate way to get your money out of the financial system, and to protect your wealth.