Bitcoin

A Yale expert has added his voice to the growing list of bitcoin naysayers by arguing that it is a ‘dangerous speculative bubble.’ The digital currency has been experiencing record highs throughout 2017. However, despite the impressive journey that bitcoin has been on, that hasn’t stopped many from claiming that it is in a bubble. Another voice added to that list is Stephen Roach, a Yale University senior fellow and the former Asia chairman and chief economist at Morgan Stanley, reports CNBC.

The price of bitcoin has risen above $12,000 for the first time. According to CoinDesk’s Bitcoin Price Index (BPI), the price of the world’s largest cryptocurrency by market capitalization is trading at $12,201.67. This represents a gain of just over $500 since the day’s open and a gain of more than 4 percent overall. With Wednesday morning’s spike, the cryptocurrency now has a total market value of about $203 billion, more than twice Goldman Sachs’ market cap.

The uncertainties of the monetary system mean that bitcoins and cryptocurrencies will be used increasingly in the future, especially once the regulatory bodies have found a way to eradicate anonymity, charging the exchanges with anti-money laundering responsibility.

The majority of market observers presently consider it a foregone conclusion that the Fed will raise interest rates by 25 bps in December and arrive at a base rate of 1.25% to 1.50%. At the same time QT (Quantitative Tapering) is supposed to be progressing at US$ 10 billion monthly. More rate hikes are expected in 2018. As in the past such a Fed policy will probably result in a recession as higher interest rates and tightened credit will slow down growth.

Bank of Canada thinks now is a good time to research their own digital currency. Although the name remains unknown, they are not the first financial institution to contemplate such an approach.

Central bank digital currencies are a very unusual development in the financial sector. So far, no major bank has made any significant progress in developing such a currency. Bank of Canada may be the first to achieve some breakthrough in this regard. A paper has been circulating which focuses on creating a native digital currency.

Following new cryptocurrency regulations in April, Japanese police have pointed to 170 cases of money laundering via cryptocurrencies reported by exchange operators in six months between April and October.

The first such report by the National Police Agency was conducted after the law on prevention of transfer of criminal proceeds was revised in April, requiring cryptocurrency exchange operators to report transactions suspected to be involved in money laundering.

Bitcoin’s price has levelled off at around $9,600 on Friday after the cryptocurrency lost almost $2,000 in less than 24 hours over Wednesday and Thursday. Despite the falls, bitcoin is still trading at almost ten times its value at the start of the year.

And according to the Bank of France Governor Francois Villeroy de Galhau, Bitcoin is a speculative asset and people who invest in it do so at their own risk.

Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.

However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins.