Now Uruguay Builds a Cryptocurrency

Uruguay’s central bank is building a digital currency. Other central banks are doing the same thing. For many observers, the kind of digital currency that a central bank would build may have little to do with a bitcoin-style cryptocurrency.

For one thing, cryptocurrencies like bitcoin have caps so they cannot print unlimited money. And cryptocurrencies are not governed by central banks. That means the value of the money is market-based, not fixed by bankers.

Nonetheless, banks like The Banco Central del Uruguay (BDC) are trying to make their own digital currencies even if it may not bear much resemblance to something like bitcoin.

Bills will be created, nonetheless, that can be passed via cellular from one party to another. The project is not yet launched but could be shortly.

Bannon Predicts the End of Crypto

The CEO of JPMorgan Chase bank, Jamie Dimon, says “it will end badly” for cryptocurrencies. He thinks that currencies will eventually end up on the black market after having been made illegal.

He told CNBC:

“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down.”

He also said governments could issue digital currencies, though they wouldn’t exactly be cryptocurrencies.  A company called Blockswater in Switizerland has made a market complaint featuring Bannon for previous remarks.

Bart Chilton Wants Crypto Regulation

Former US CTFC markets regulator Bart Chilton said that regulation could even-out crypto prices.  Recently bitcoim slipped from $5,00 to around $3,600.

He wrote in an editorial, “There’s no questions – zero – that had digital currencies been regulated, I would have sought an investigation into the precipitous price changes we’ve witnessed.”

Chilton has long wanted some kind of framework to oversee cryptocurrencies. But in fact primary regulation is already in place. Primary regulation is after all market regulation. Secondary regulation is government regulation.

Primary regulation must take place before a security can trade. It makes a security tradeable. Secondary regulation is what people think as primary regulation, but it is not.

Chilton wants to impose secondary regulation, which is far more invasive that primary regulation. He believes that this will smooth out crypto prices. In fact, it must be a kind of price fix. And in the long-term price fixes never work.



Casey Is a Fan of Crypto and Climate Change

Michael J Casey, chairman of CoinDesk’s advisory board, thinks ICOs could remedy some of humanity’s big, troublesome issues. He’s especially vocal about ICOs, tokens and … climate change.

In and editorial, he wrote that rules  are embedded into the smart contracts working with crypto. This tells people what to do.

It is featured in plans for a “Climate Coin” where tokens become more valuable as the climate improves. The result, he says, is that tokens can rewrite the way the market works and help people grapple effectively with climate change.

The real problem of course is that there may not be any climate change, not the kind that people can do anything about. Before individuals get all worked up about climate change, they better decide if it is what people say it is, or something less.

There are plenty of scientists who don’t believe in climate change and they ought to be listened to alongside of those who foretell the worst.



Mexico to Let Central Bank Supervise Crypto

Mexico will give its central bank the ability to supervise cryptocurrencies. A translation of some of the bill:

“[Financial technology firms] can only operate with virtual assets that are determined by the Bank of Mexico through general provisions. To carry out operations with such virtual assets, they must have the prior authorization of the Bank of Mexico.”

President Enrique Pena Nieto says the fintech legislation will begin on September 20. There are no voices raised in opposition to the bill it seems, but there should be. Cryptocurrencies are a way to use currency that has nothing to do with a central bank.

To put a central bank in charge of a currency is to ensure sooner or later that the currency will come under attack from the central bank. That’s because central bank currencies and crypto currencies cannot exist together in the long term.

Either cryptocurrencies or central bank currencies will have to change. More likely neither will change and the upshot will be a significant fight.

SEC Blockchain Meeting to Take Place in October

The US Securities and Exchange Commission (SEC) will talk about blockchain in October. The discussion will take actually take place on October 12. No further details are available at the moment.

The SEC is not the only group to discuss blockchain. Other government entities have examined the topic as well including the US Treasury Department and the CFTC.

A discussion does not necessarily imply action, certainly not immediate action. But chances are at some point, the SEC will issue regs involving blockchain. The meeting will be available on the SEC website, live, for those can’t come.

China Continues Shutdown

China will close some bitcoin exchanges during September. China’s regulators have said  exchanges need to close because they don’t have formal licenses.

There is a document circulating as well that explains what exchanges need to do. One exchange, BTCC, said it will shutting down and users ought to get their funds back by Sept. 30.

Some exchanges may not shut down, including Huobi and OKCoin. It is possible that China wants to radically decrease the number of exchanges so as to better control them.

Alternatively, government may actually take control of whatever exchanges are left. There is speculation that government does not want to shut down the sector entirely. The plan is not yet clear and the government is in no hurry to explain itself.  Presumably it will do so in due time.

Tusk Sees Crypto Development

Bradley Tusk, founder and CEO of Tusk Ventures, has responded to Jamie Dimon, head of JP Morgan, who said bitcoin and cryptocurrencies generally were in a big bubble. Eventually they would collapse.

Tusk makes a point that we have already made numerous times, that bitcoin is an alternative to current central bank money. He doesn’t say it in so many words, but the implication is the same.

… People are desperately seeking both a safe haven from the volatility of their own currency and homeland, and for a way to connect with others who think like they do – whether they share a common passport or not.

That’s the point. It is the reason why Dimon is wrong. Cybercurrencies may have rises and falls. Many may go out of business, but not all. Many may go down, but not necessarily to zero.

Determining the value and volume of money via a price fix, which is what central banks do, doesn’t satisfy the growing number of people who understand the sad simplicity of the process. It has gone on too long and been explained in ways that are too specific. The specificity gives rise to further repugnance,

He says, “Faith and trust, like anything else, needs somewhere to go during a vacuum.” And that is the point. There is something to take the place of state currencies now, beyond gold and silver which are highly controlled by banks.

China may try to crush cryptocurrencies, or take them over, but one way or another for the foreseeable future some cryptocurrencies will continue and even prosper.

And the currencies that central banks do take over will probably collapse because they will lose the  qualities that make them an alternative money. Price fixing doesn’t work, whether applied to state money, or alternative currencies.

At least some cryptocurrencies will continue, even after a major crash. They are not entirely going away. Even if outlawed they will continue via gray- and black-markets. People have the ability to make private money again, and they will continue to use it.


Dimon Latest to Call Bitcoin a Bubble

Jamie Dimon, chief executive of JPMorgan Chase & Co., has said that bitcoin is a fraud and a financial bubble.

He said bitcoin was as bad or worse than Tulipomania. As a result, cryptocurrencies generally moved down. Bitcoin itself lost five percent. This comes on top of Chinese moves to reduce crypto exposure throughout the county which thrust bitcoin below $5,000..

Anyone trading cryptocurrencies would be fired, Dimon said. But, on the other hand,  he wouldn’t sell bitcoin short because it could still rise a lot more before crashing.

Bitcoin is probably overpriced but that doesn’t mean it will fall to nothing. There is a reason for bitcoin. It is a private money that people are using instead of central bank currencies.

Many people do not like central bank currencies with their too-low interest rates and too-high volume of money. Bitcoin is an option, along with other cryptocurrencies, to diversify.

Bitcoin may indeed go lower, perhaps much lower. But it won’t simply vanish until alternatives to central bank currencies are offered. Central banks themselves say they are working on such alternative currencies. But it is highly doubtful that central banks can create legitimate alternatives.

Gold and silver are good alternatives to cryptocurrencies But gold and silver markets seem overwhelmingly controlled by central banks and Wall Street firms.

Bitcoin and other cryptocurrencies are not simply going to vanish overnight. Right now they represent a definite alternative.

Mark Changes His Mind

Oaktree Capital co-chairman Howard Marks has rethought his position on cryptocurrencies. He had said they constituted a bubble. Now in a note to investors, Marks reexamines his initial idea.

Marks thinks cryptocurrencies are in a bubble. But he agrees after all that cryptocurrencies are “money” though he is not sure how many will ultimately survive.

“I still don’t feel like putting my money into it, because I consider it a … bubble,” he reportedly said in the note.

He has changed his mind – somewhat, not entirely.