Opinion
Cryptocurrencies are here to stay By Chris Horlacher Chris Horlacher, CPA, CA, is CEO of Equibit Group.
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n a world where trust in institutions and figures of national authority is becoming scarce, a financial system based on distributed network consensus should not only be welcome, but enthusiastically embraced. Digital currencies offer a very real reason for institutions built on centralized authority to be concerned and for their leaders to risk internet backlash for declaring they’ll never have longevity or mass adoption; cryptocurrencies are disruptive to their business. In early September, JPMorgan CEO Jamie Dimon very publicly commented that Bitcoin is a “fraud” and will eventually “blow up.” These statements compounded onto the downward momentum from China’s regulatory news, sending the price of Bitcoin down from about US$5,000 to roughly $3,000. Following this news, some speculated that Dimon may have said such things in an effort to manipulate the market and purchase at the dip, and they may have been correct. On September 15th JPMorgan Securities Ltd. reportedly purchased “massive amounts of Bitcoin XBT, an instrument tracking the price of Bitcoin, through a Swedish exchange,” as reported by The Merkle. To the uninitiated, cryptocurrencies may appear like financial rogues, without tangibility or underlying value, but this is not the case. Their inherent values lie in the decentralized, global communities that support them, both in miners producing
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digital tokens and market participants investing in and transacting with the various currencies. They are the ultimate network effect; just like social media networks rely on community use for their value, so too do cryptocurrencies. Cryptocurrencies demand proof-ofwork in order for tokens to be added to the ecosystem; mined via hash algorithms that establish blocks of market data on the blockchain. In order to perform this proofof-work, miners must front the costs and power necessary, thus demonstrating a genuine commitment to the growth of the market and use of the currency. This explains why Bitcoin is often likened to “digital gold;” people believe so strongly in the value of Bitcoin that they are willing to expend real resources in order to retrieve it. But their use and worth extends far beyond market transactions. Acting as an incentive for the mining process and a vehicle for the transfer of value, these network utility tokens are the foundation of new, decentralized economies. Because distributed ledgers facilitate secure, peer-to-peer transfers, blockchain technology holds innovative promise for many industries including finance, shipping, food distribution and health record management. Blockchainbased platforms developed to simplify and enhance these industries require a native access token that enables use of the platform. Without it, what would the miners be expending resources for? This is the case when it comes to Equibit Group. The Equibit blockchain allows companies access to primary and secondary capital markets, liquidity and an opportunity to control their own share issuance, governance and investor communications
and services. Our token, EQB, acts as the key to the platform, enabling issuing companies to provide stores of value and investors access the marketplace. EQB is our platform currency, but more importantly, it is a token that provides a public utility to users. Evident in the burgeoning marketplaces of Bitcoin, Ether, Ripple, and soon Equibit, priorities are shifting towards distributed trust, collective data security and transparent market movement. Following Dimon’s remarks, Arthur Levitt, former and longest-serving chairman of the U.S. Securities and Exchange Commission, told the Washington Post, “Cryptocurrency is with us for the future. I don’t know whether it will be Bitcoin or Ethereum, to name just two. But it’s here to stay because of the disparity between countries where a monetary system is robust and countries where there is virtually no monetary system. This comes up as an alternative currency.” Architected to democratize financial power and access, cryptocurrencies offer an attractive alternative to fiat currency. With no central access point, markets are distributed across the globe, free from intervention or even manipulation by a regulatory body like a central bank. Decentralized trust and security empowers the unbanked, removing traditional barriers to access in the financial system. “But will cryptocurrency go away?” wrote Bradley Tusk, founder and CEO of Tusk Ventures in an op-ed for CoinDesk. “No. This is not a monetary version of Esperanto. Faith and trust, like anything else, needs somewhere to go during a vacuum.” At Equibit Group, we agree. Cryptocurrency represents an evolution in the global marketplace and its value is too great to be ignored.
September/October 2017