CRYPTOCURRENCIES CAN BE A HEDGE AGAINST BREXIT RISK
Over the last two decades, we have been rapidly moving towards full digitalisation of assets. With blockchain-based tokens such as Bitcoin and Ether being the largest in market capitalisation that are freely available to the public.
Digitalisation and decentralisation of assets created numerous use-cases: They are used as a currency, for payments, fuel to operate a software, or growing digital kittens.
Uniquely, cryptocurrencies are not interdependent like the Pound, the Euro, or the Dollar. They are decentralised and therefore present a viable choice for businesses and consumers as a alternative store of value, unit of account, and most importantly a unit of exchange.
By providing a secure and unaffiliated alternative that transcends national borders, Bitcoin is now seeing increasing mainstream adoption from both consumers and established financial institutions.
Historically, when people lost confidence in a currency they have looked to gold as a safe haven. Now as the UK looks to leave the European Union, investors and business alike are turning to digital assets such as cryptocurrencies as an alternative store of value because unlike gold, crypto provides a immutable method of exchange.
In times where we are rapidly moving towards a cashless society, we need to empower people to be in control of their digital assets. Cryptocurrencies are based on secure, reliable technology, and are decentralised, which makes them an excellent tool to weather a financial storm.
Leading economists predict that Brexit will have far reaching implications. A run on the Pound is feared; something that would see international investors racing to sell off sterling and sterling assets, driving down the value of the currency in the process.
Business investment is also likely to suffer in the fallout, with major multinationals preparing contingency plans to move activity to mainland Europe should Britain leave the single market without a deal.
In other regions that have experienced economic instability, crypto has been part of the answer. In Africa, countries have capitalised on mobile money solutions, particularly crypto, to make transactions.
In Venezuela, hyperinflation has created a tremendously growing cryptocurrency community as people seek refuge from the falling Bolivar. From 2016 to 2018, average trading volume on localbitcoins in Venezuela has increased from double digits to over 1500 Bitcoin a week.
Diversification into cryptocurrencies continues, although many have different reasons for doing so.
Notably, Goldman Sachs as well as a number of Swiss Banks are rapidly developing their cryptocurrency offerings. Goldman Sachs even introduced their own currency, the Circle USD Coin, although its value is tied to the dollar.
This represents a significant vote of confidence in cryptocurrencies and blockchain as stable way to store and transfer wealth. Likewise, global consultancy firm EY recently expanded its blockchain strategy with the acquisition of the Crypto-Asset Accounting and Tax (CAAT) technologies developed by Elevated Consciousness.
As veterans in the space, we’re excited to see what widespread adoption will mean for crypto. We’re approaching a period of instability and people need to understand that cryptocurrencies are going to be a force for good, not just tokens to be speculated upon.
