Russian Crypto-Rouble and the implications

in #cryptocurrencies7 years ago (edited)

https://news.bitcoin.com/putin-issue-russias-national-cryptocurrency-cryptoruble/

I don't think they're going to mess around either. 

I've been realising the last few days, especially with Bernanke doing the keynote at Swell, that a lot of the current pricing of 'cryptos' is based on assumptions that they will behave as currencies and replace fiat, but I just don't think that will ever happen, for reasons like this. 

From a trading point of view that isn't a bad thing, and it's more important to have a realistic perspective on where this is all going so you can position yourself right and take advantage of the moves at the right time (I know, right? The holy grail of trading is that kind of clairvoyance).  

But I think maybe it might be more helpful to let go of the fiat replacement idea altogether, and try and view it as its own thing. I think it might be holding a lot of people back, so that there is too much emotional investment in the expected outcomes and the "fuck the banks" idea a lot of people have. But I just don't think it's at all realistic to expect that Bitcoin or any other crypto will replace fiat. Governments will do their own, and so we'd be best placed to try and work out what the implications will be. 

And besides, Etherium, and all the other various technologies coming out are way more than a straight currency. Smart contracts are going to disrupt the legal industry, and a bunch of others. So in a way it might be better to see them more like tech-stocks or something, but even that isn't quite right. They are something new, and it's just as exciting for its potential for everyday people who may never have thought about getting into trading otherwise to have a chance to profit from it.

But the expectation that fiat will be replaced is I think playing a big part in the current pricing of these "coins" (maybe tokens is a better term?), and so that means the pricing is already unrealistic, because eventually people will realise this more and more, and the bubble will burst. 

News stories like this are the early stages of this. I think people in Russia & CIS have been very active in the crypto space, and when there is an official currency that even mum and dad will be able to use, those expectations might start to reset.

One implication I think is a lot of coins (especially the privacy ones) will be consigned more to the 'dark web' and go back to early Bitcoin/Silk Road days, but that also means a huge loss of market volume providing liquidity for them, so even though they will be valuable, the prices on those could go down too. China/Russia/Sth Korea (and probably most governments) are already making moves towards restricting exchanges, and it's only a short step to letting them operate but deciding which coins can be 'officially' traded on them, and it will just be easier for most people to stick within the rules. 

The 'dark web' is another factor altogether and could well grow a lot more too as more governments are increasing their spying etc, so 'dark trading' could well grow and flourish, but it still comes back to that volume/liquidity point, because there are never going to the numbers of people getting into it now who will go to that bother if there are 'official' regulated ones they can more easily use.