A couple of online pieces I read this weekend really illustrated the danger of hype in blockchain investment. There’s no doubt this is an emerging technology with the potential to change money markets, security, banking and more. I just want to make sure we’re not all waving our hands screaming “Go, Lemmings GO!” as we all run off a cliff.
The first piece is a chilling reminder real world politics still have consequences in the libertarian utopian online world. In this piece by Blockexplorer, they explore the announcement by the Bank of Vietnam that as of 2008, cryptocurrencies will be illegal in the country.
The announcement (link in Vietnamese) sets a $9,000 fine for issuing, supplying or using illegal means of payement. The announcement calls out bitcoin specifically (translation below from Blockexplorer):
“From 1-1-2018, the act of issuing, supplying and using illegal means of payment (including bitcoin and other similar virtual currency) may be subject to prosecution in accordance with the provisions of clause 1 (h) of Article 206 of the Penal Code 2015 (as amended and supplemented in 2017).”
“As such, Bitcoin and other similar virtual currencies are not legal means of payment in Vietnam. The issuance, supply, use of bitcoin and other similar virtual currency as a means of payment is prohibited in Vietnam.”
There’s still a lot of murk here, including whether or not the ban covers investing as well. You can also be sure central bankers around the world are going to be watching what happens in Vietnam.
Will the government be able to effectively stop the use of cryptocurrencies? If not, how tough will enforcement be? Will prosecutions be profitable? All of these questions and more are of intense interest to law enforcement, legislators and markets.
For now I’d concur with Blockexplorer, wait and see, but this is an important test case, and I’ll keep following it in the new year.
The second piece is more fun, but just as demonstrative. A company in the U.K. added the word ‘Blockchain’ to its name and it shares surged 394 per cent.
Bloomberg reports on On-Line PLC jump came in one day as it announced the name change. Even after the company rushed out a statement its Blockchain product was in very early stages, the company still ended the day over 200% higher, after trading volume 16 times higher than the previous year.
I’m sure the market will correct this morning but I wouldn’t be surprised if the company still walked away with a nice basket of cash.
Bully for them, I’m not going to rain on their parade. But come on now, all they did was put blockchain in their name?! This is a clear sign we may be entering overheated hype-town in the blockchain market. Double down on due diligence (and say that out loud five times fast).
Both of these pieces are two sides of the same coin. Cryptocurrencies and their attendant technologies continue to mature and expand which is awesome. The higher profile means great and powerful forces are starting to take notice.
You can profit if you keep your wits about you and see the changes coming.