As the old adage goes: Another day, another Bitcoin. That’s right, isn’t it?
We’re back in London with this episode of the Luno RoundUp where we cover the latest news in the crypto-sphere. Let’s get right to it.
Regulate, or tempt your fate
Regulators in Japan have reportedly introduced new regulations for cryptocurrency margin trading. Margin trading is the use of borrowed funds to buy assets, which are generally financial in nature. These assets then serve as security for loans. The new proposed regulations aim to limit the amount that may be borrowed. With this move, regulators reportedly aim to protect investors from getting caught up in Ponzi Schemes, as well as encourage legitimate companies to practice offerings as fundraising tools.
One more time, for the people at the back
Seriously, we need regulation. Bitwise Asset Management informed the United States' Securities and Exchange Commission (SEC) that 95% of Bitcoin trading volume reported by unregulated cryptocurrency exchanges were fake or non-economic in value. This is another indication that clear regulatory standards are required across the board. This will help root out bad actors and help grow trust in the industry and its legitimate market players, which is an outcome we fully support (in case it’s not obvious, thus far).
Uncertain futures on the horizon
Lastly on the regulation front, in a broad statement on cryptocurrencies, The Basel Committee on Banking Supervision, a group of international banking authorities, has warned that the growth of cryptocurrencies may create additional risks to banks and present global financial stability concerns.
Square: Bitcoin salaries and crypto initiatives
Square CEO and Twitter founder, Jack Dorsey, announced in a series of tweets that Square is looking to hire a few engineers and one designer to work full time on their crypto initiatives. What makes this really interesting is that these new hires will report directly to Dorsey, and have the option of being paid in Bitcoin. Would you want to be paid in crypto? We’re interested to see how this works out.
IBM’s blockchain and stablecoins a-plenty
Six international banks have reportedly signed letters of intent to issue their own stablecoins backed by their local currencies on IBM’s live blockchain-powered payments network, Blockchain World Wire (BWW). This is big news as the network, launched in collaboration with Stellar, aims to enable near real-time international settlements between banks.
Your crypto is good here
Swiss online retailer, Digitec Galaxus has announced it'll accept crypto payments for purchases over $200. In addition to this, Fortune 500 company, Avnet, Inc., has announced a collaboration with crypto payment processor, BitPay, to accept cryptocurrencies. The company is one of the world’s largest distributors of electronic components and technology solutions. This is a big deal and a great step in the right direction towards encouraging this type of adoption from other large revenue companies.
New kids on the block(chain)
The Danes are no strangers to innovation and digital disruption, and now is no exception. Former NATO Chief and Danish Prime Minister, Anders Fogh Rasmussen, has recently been appointed the position of Strategic Advisor at a new Swiss blockchain startup, Concordium. At this stage, it seems their aim is to create a type of blockchain for public administrations to ease the voting process and increase transparency and accuracy. The full launch is set for 2020, so we'll have to keep our eyes on further updates.
You asked, and we listened.
“Why does the Bitcoin price fluctuate so much?”
We love this question! Before we answer this, let’s not forget that other technologies, like the internet, for example, which has been around for many decades - experienced a similar type of volatility on its journey towards mass adoption.
Cryptocurrency is still a relatively new technology, and new technologies tend to go through what is known as hype cycles. These cycles start off by just a few people knowing about it and then gradually gain momentum to the point where suddenly everyone is talking about it - and then it begins to taper off once more for the cycle to repeat. The price of Bitcoin is related to its position in this cycle of hype.
Another factor which influences the price of Bitcoin is the media. Stories which affect the volatility of cryptocurrency include articles about regulation, news about security breaches, and a statement from influential people in the fintech industry. It’s also important to note that new innovative, disruptive markets can be quite volatile by nature. These kinds of markets also tend to have less liquidity than say, for example, a foreign exchange where trillions of dollars are traded daily. For example again, on Bitcoin’s market, there may only be 1 or 2 million dollars traded daily. Because of this, these markets tend to move very quickly due to this low liquidity.
It’s been an inspiring week or two in crypto! Let us know which story you enjoyed most by getting in touch with us on Twitter. You stand a chance to win some exclusive Luno merch when you ask us your most desired crypto-related question, and use the hashtag #AskLuno so we can find you.