Oct. 31, 2008, marked the birth of bitcoin. Ten years on, the world’s first cryptocurrency is at the forefront of a complex financial system viewed warily by markets and investors.
From its first evocation amid a global financial crisis, in a white paper written by Satoshi Nakamoto, an unknown pseudonym, bitcoin conveyed a political vision.
The “abstract” set out in the paper for bitcoin, currently worth about US$6,400 per unit from a starting point of virtually zero, was for “a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.”
A decade on, this continues to be carried out via a decentralized registry system known as a blockchain.
Such ambition for a cryptocurrency was fueled by the bankruptcy of US investment bank Lehman Brothers in September 2008, an event that discredited the traditional system of “a small elite of bankers ... [that] establishes monetary rules imposed on everybody,” said Pierre Noizat, founder of the first French bitcoin exchange in 2011.
Following its creation, bitcoin evolved for several years away from the public eye, grabbing the attention for the most part of geeks and criminals — the latter seeing it as a way to launder money.
After bitcoin surpassed US$1,000 for the first time in 2013, it began to attract the attention of financial institutions.
The European Central Bank compared it to a Ponzi scheme, but then-US Federal Reserve chairman Ben Bernanke hailed its potential.
In early 2014, the cryptocurrency faced its biggest crisis to date, with the hacking of the Mt. Gox platform, where about 80 percent of all bitcoins were traded.
The result was a collapse in their value, leading to predictions of the virtual currency’s death. It took until early last year for bitcoin’s price to fully recover.
That marked the start of a “turning point,” Noizat said, as the controversial cryptocurrency then rocketed to more than US$19,500 by the end of the year, according to Bloomberg data.
That meant bitcoin had a total capitalization of more than US$300 billion, according to the specialized Web site Coinmarketcap.
By January, the value of all cryptocurrencies exceeded US$800 billion, before the bubble burst.
The concept of a digital currency has progressed substantially thanks to bitcoin, cryptocurrency analyst Bob McDowall told reporters, pointing to the creation of 2,000 rivals.
“It becomes more than a technological, economic innovation. It almost becomes a religion for some people,” he said.
According to Anthony Lesoismier, cofounder of investment fund Swissborg, which offers portfolios based on blockchain, “the real revolution has been on a philosophical level.”
However, for economist Nouriel Roubini, decentralization in crypto is a myth.
“It is a system more centralised than North Korea. Miners are centralised, exchanges are centralised, developers are centralised dictators,” Roubini tweeted.
If the initial idea was for bitcoin to facilitate payments, a majority of observers recognize that it is used above all as a store of value or as a speculative instrument owing to volatility in its value.
“You need 20 years for this kind of ... technology to take hold completely,” said Noizat, who is banking on faster transaction speeds for bitcoin.
As it stands, about five to 10 bitcoin transactions can be processed per second, compared with several thousand for Visa Inc cards.
US market regulators are considering applications for bitcoin-based exchange-traded funds, which if approved by the US Securities and Exchange Commission would see the virtual currency become part of a financial system it set out to bypass.
“We must cross some bridges in the short term” to generate the general public’s interest and trust, said Lesoismier, who described himself as both an “idealist” and “realist.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS