Socio-Economic Perspectives

Crypto-assets a sound investment for uncertain times. National currencies are no longer ‘sound money’. Events in countries where inflation is spinning out of control show more clearly than ever just how volatile fiat money can be. For example, as reported by The Economist in early 2018, the Bolívar – Venezuela’s national currency – had lost 99.9% of its value in just two years. The Turkish lira experienced similar problems in the past and much indicates it may face another currency crisis in the future.

Such examples may seem extreme yet are by no means exceptional. One study of 775 fiat currencies found that over a 27-year period, 20% of them had failed due to hyperinflation and 21% had been destroyed in war. Even though not all currencies may face the same fate, constant loss of value due to inflation is simply the rule in the economies based on fiat currencies.

Global events strongly suggest there is an increasing demand for an open and more transparent monetary infrastructure. In fact, several factors show that such a shift is already underway. Bitcoin and other cryptocurrencies are in the centre of this quiet revolution in the world of finance.

Moreover, even more companies and funds are projected to participate once governments establish regulatory frameworks for this new asset class. Such works is already underway in the world’s largest financial markets. Combined with the current market dynamics, this gives us a reason to believe that crypto-markets will continue to grow well into the foreseeable future.