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Bitcoin’s Real Value Could Be Zero, Says Morgan Stanley

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Attempts to quantify bitcoin’s ‘true’ value have proven notoriously difficult, but for a Morgan Stanley strategist, the digital currency is possibly worth nothing at all.

In a research note to clients, Morgan Stanley analyst James Faucette said bitcoin may be worth zero dollars. At the time of writing, the digital currency was worth roughly $12,700 following another major slump.

Bitcoin’s Valuation Conundrum

The paper, titled “Bitcoin decrypted,” gave compelling reasons why the digital currency was difficult to valuate. In particular, bitcoin cannot be treated like a currency because there is no interest rate tied to it. Its daily volumes also pale in comparison to the $5 trillion-plus global forex market.

Though many have likened bitcoin to gold, it lacks the intrinsic value of precious metals. After all, gold and silver are not just investments, but key inputs in jewelry and electronics. Bitcoin does not appear to have the same use cases.

Faucette argues that, while bitcoin has been marketed as a payment system, a lack of scalability has limited its adoption as a payment vehicle. This certainly explains the growing pressure within the blockchain community to improve the algorithm. Backers of Segwit2x and other hard fork proposals have sought to improve bitcoin’s transaction capacity in hopes of generating greater mainstream adoption of the digital asset.

Until now, bitcoin has attained mainstream appeal as an investment, but less so as a payment mechanism. Of course, there are exceptions to the rule. Japan’s recognition of bitcoin as a legitimate payment method has created more avenues for transacting the digital currency. Additionally, hundreds of thousands of merchants already accept bitcoin as a payment method. That being said, Faucette argues that the top e-Commerce merchants continue to neglect bitcoin.

The numbers certainly don’t lie. In the third quarter of 2017, only three of the top 500 global e-commerce merchants accepted bitcoin as a form of payment. That’s down from five a year earlier.

“If nobody accepts the technology for payment then the value would be 0,” Faucette said.

Growing Asset Class

Morgan Stanley has adopted a more upbeat position on bitcoin than fellow Wall Street banks, with CEO James Gorman arguing that cryptos are “more than just a fad.”

“The concept of anonymous currency is a very interesting concept — interesting for the privacy protections it gives people, interesting because what it says to the central banking system about controlling that,” Gorman said in September.

The bank says investors have already poured $2 billion into cryptocurrency funds this year alone, with 2018 shaping up to be an even bigger year.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image from Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 601 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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  1. mvppvm_07

    December 24, 2017 at 10:06 pm

    95% – 98% of US gas stations do not have electrical charging. Tesla will fail.

    Morgan Stanley’s analyst is tainted by his career, I believe. His punch is juiced with Wall Street pixie dust. I’ve sold computer hardware and services for almost twenty years. I accepted Bitcoin in 2015. I sold the business in 2016 but still have myself set up to accept BTC or XRP or….. it’s pretty easy to do.

    The article seems to assume simplistic buying / selling / trading, not the arbitrage or parsing capabilities available to digitized monetization.

    This assault from the traditionalists will continue, get stronger and become nasty as crypto adoption shifts from bleeding edge to leading edge models. Who’s to say this week’s correction isn’t about some traditional multi-billion or trillion dollar player creating FUD attempting to weaken the market so that they can introduce themselves to significant profit in the next 24 months.

    Other than that, it’s a great article. Morgan Stanley: Making Stupidity Great Again.

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Cryptocurrencies

Vanuatu Joins List of Countries Issuing Crypto Licenses

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The country of Vanuatu approved and delivered a ‘stock exchange license’ to a cryptocurrency exchange for the first time ever, according to reports coming from the platform in question.

DSTOQ (which launched yesterday, along with a ‘tester’ MVP) announced the public reveal of their project along with the claim of being “the first fully licensed stock exchange for trading security tokens and investing in real-world assets using cryptocurrencies.”

Due to being a member of the Commonwealth of Nations, the license as obtained by DSTOQ will only be viable at present in European territories primarily, rather than the USA.

Vanatu: What, Where and Why?

The Republic of Vanuatu is a nation of islands located in the South Pacific ocean, and one that made crypto headlines earlier this year, when it was mistakenly reported that the modest population’s government would be patriating new citizens in exchange for a “$200,000” Bitcoin payment. Claims which the country’s citizenship office vehemently denied.

This wouldn’t be the first time the Vanuatu had caught the eyes of the financial press, as the country was listed by Forbes as being amongst “The tax havens hidden in plain sight” where the writer noted that banking organisations as large as “ANZ and Westpac have offices” in the country.

Countries for Crypto

Other countries that have been considered ‘tax havens’ by Western pundits (and members of their own national press outlets), such as Taiwan and Singapore have been noted for their particular leniency towards if not acceptance and support of cryptocurrencies.

The recent news coming out of Vanuatu suggests that they may be the latest to join a growing number of nations which could alternately be referred to as ‘Crypto Havens’, with regards to regulation and enforcement.

These nations skirt the traditional barriers to entry which face many potential investors as well as companies. A strong example of this can be seen with Hong Kong, which has relatively lax laws covering the mining and trade of cryptocurrencies in comparison to neighboring China – which has implemented almost-blanket bans.

In European mainland, Estonia has also proven itself to be a clear proponent for licensing with regards to cryptocurrency – with the country’s government going as far as to issue wallet and exchange licenses to organisations which it deems fit.

What Does This Mean?

It’s promising to see a diverse range and geographical dispersion of countries officially on-boarding cryptocurrency into their nations’ governmental economic and cultural strategies for the future, however it is also telling that all of the most enthusiastic proponents of the technology are isolated entities. Singapore, Taiwan, and Hong Kong for example, are nation-states – despite many of them having close cultural and ethnic ties with their neighbouring nations; Vanuatu is a multitude of islands separated from the world by sea; and even Estonia is mostly surrounded by water, with its vast collection of peninsulas.

This physical distance from other countries is somewhat representative, however, of their political distance from the rest of the world – as well as that of their influence. Until the trend starts spreading further, to countries with greater sway and presence on the global stage.

In this light, it’s worth taking a look at how the Financial Conduct Authority in the United Kingdom is approaching cryptocurrency, a country with a long and seminal role in both historical and modern financial markets. The agency has called for a world-wide “effort to speed up fin-tech growth” and utilised its relations with other countries in an attempt to establish a global regulatory “sandbox” with the aspiration of speeding up or mitigating the formal approval processes.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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“We should prohibit U.S. persons from buying or mining cryptocurrencies,” says Rep. Brad Sherman

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A Congressional Financial Services Committee meeting today turned alarmingly hostile to cryptocurrencies and blockchain technology as a whole.

This hostility stemmed initially from Democratic Representative Brad Sherman, who stated,”We should prohibit U.S. persons from buying or mining cryptocurrencies.”

According to a senior political journalist from Politico in attendance at the meeting, Rep. Sherman believed that mining is so exceptionally energy intensive and that it’s so much much more environmentally damaging than it’s potential utility is worth and thus, that the government should ban it to eliminate the possibility of further destruction.

Importantly, but likely not coincidentally, is the fact that Rep. Sherman’s biggest campaign contributor was a credit card processing company.

The company is Ally Wallet, which describes itself as, “The preferred online merchant services company and online global payment gateway solution for businesses that need to accept online payments.”

Unfortunately, Rep. Sherman’s utterances were not the only anti-cryptocurrency statements at the hearing. Specifically, Alex Pollock, a fellow from the Pro-Free Market think R Street Institute, stated his view that, “a central bank virtual currency is one of the worst ideas in recent times.”

When this is combined with Fed Chairman Jerome Powell’s comments earlier this week that, “a Fed-backed cryptocurrency is not something we’re looking at”, it paints a picture of a government increasingly alarmed by the growing use of cryptocurrencies in general.

Chairman Powell, also raised an issue with Bitcoin’s use in money laundering and other financial fraud. He elaborated further by stating that “there are too few places taking crypto as payment and the value is too volatile to be a stable store of value. Cryptocurrencies undermine the U.S. sanctions regime against terrorists/adversaries.” Powell concluded when pressed that he saw, “more risks and concerns in cryptocurrency than in its potential use.”

Additionally, at the same meeting, Representative Ryan Peterson stated that “I’m someone who believes we should still be on the gold standard and I think we need to audit the Fed because I don’t trust them.” Rep. Peterson also allegedly stated his belief at the meeting that, “digital currencies are Ponzi schemes.”

It is somewhat alarming in the opinion of this analyst that an ignorant consensus seems to be forming in the upper echelons of government that views cryptocurrency as inherently a threat to their power, and that as a result it must be stopped.

Luckily, there was some pushback from a representative of “Bitcoin University”, albeit after the meeting. This individual confronted Rep. Andy Barr, who is a Financial Services Committee member, and exclaimed that “he needed to bring more Bitcoin experts into the next hearing.”

Whether these combined statements is ultimately reflective of a US federal policy shift remains to be seen. But for proponents of Bitcoin and cryptocurrency, they serve as a reminder that those in positions of power will not lose their status without a fight.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Government of Malta Passes New Cryptocurrency Legislation

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Malta’s embrace of digital currency came full circle Tuesday after lawmakers passed three separate crypto-related bills that could transform the island nation into a blockchain powerhouse.

‘First in the World’

CCN broke the news Wednesday that all three bills have gone through Malta’s legislative process, putting them on track for full implementation. The second reading of the bills was carried out Tuesday night in a plenary session that began at 6:00 p.m. local time, parliamentary records show.

The approved bills include the Virtual Financial Assets Act (VFA),  the Innovative Technology Arrangements and Services Act and  the Malta Digital Innovation Authority Act (MDIA).

VFA deals specifically with the regulation of initial coin offerings (ICOs), ordering new token projects to publish whitepapers and detailed descriptions of the entire project.

The  Innovative Technology Arrangements and Services bill governs blockchain startups and other businesses looking to leverage distributed ledger technology.

MDIA will effectively serve as an industry-specific governing body that will support the development and implementation of blockchain-based regulations.

Parliamentary Secretary Silvio Schembri said the bills were a ‘first in the world’ development and also announced the person heading the newly created MDIA:

“Today Maltese Parliament unanimously approved 3 bills on DLT/blockchain, a 1st in the World. Honored to have driven these bills. Announced that Mr Stephen McCarthy will be the CEO of the new #Malta Digital Innovation Authority.”

Blockchain Island

Malta has quickly emerged as a prominent player in the blockchain industry, having already lured major exchanges and businesses to its borders. Binance has announced plans to relocate to the tiny Mediterranean nation and earlier this month disclosed that it has opened a bank account in the country. OKEx, another prominent exchange, has also announced plans to make Malta its new home.

Binance and OKEx are the world’s largest cryptocurrency exchanges by trading volume, each processing more than $950 million in daily transactions.

Binance’s decision to relocate was largely driven by its desire to enable fiat-to-crypto deposits and withdrawals, something Malta says it will accommodate through local bank partnerships.

Changpeng Zhao, Binance’s CEO, has described Malta’s regulatory stance toward blockchain and cryptocurrency as “logical, clear and forward-thinking,” adding that “dozens” of similar exchanges are planning to relocate to the country.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 601 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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