The December Deadline for the ASX

The December Deadline for the ASX

It’s not often that Australia has the eyes of the world on it when it comes to innovation. But for once it’s true, and it’s thanks to the ASX.

I’m not talking about whether the Aussie market rises or falls. The rest of the world couldn’t give a flying fig about that. I’m literally talking about the Australian exchange.

That’s because the management team that run it teamed up some time ago with a company called Digital Asset Holdings. The job was to see whether they could use blockchain technology to clear and settle transactions.

The current CHESS system that underpins the ASX was installed in 1992. That’s about as modern as using leeches to heal.

We’re going to find out by the end of the year what the call is. If they go ahead, Australia’s stock market will be the first and, presumably, the rest of the world will follow.

Don’t get the wrong idea. This isn’t necessarily a catalyst for the bitcoin price.

But it will be a clear example of how an existing business is changing in the face of technology.

Other businesses can’t help but follow…

You HAVE to follow this market

I’ll keep making the same point. Even if you’re not interested in trading crypto, you have to follow what’s happening here.

There’s a lot of money that could migrate to this space. Some companies are going to get left behind.

Think of the way the internet changed all sorts of businesses, for the better, and some for the worse.

The flourishing crypto market is where entrepreneurs and developers are exploring this new sector.

You do have to be careful whom you listen to though.

As an example, BNP Paribas has come out and come up with a bunch of reasons why bitcoin is destined to fail.

Maybe it is, but it won’t be for the reasons they lay out.

They seem to think that bitcoin’s ‘promise’ is to facilitate transactions between banks and regular currencies.

This gives rise to bitcoin’s ‘flaws’, as they see it. They say the problems are as follows…

#1 No lender of last resort

#2 Deflation

#3 Unreliable exchange value

#4 No profits for the central bank

I don’t agree with any of it.

Looking at bitcoin as a currency is the complete wrong way to think about it.

Right now bitcoin is rising in price as a store of value, and as a uncorrelated asset. The amount of money that could pour into it is still staggering.

The technology around it extends way beyond a simple payment system.

There are other cryptos that work as currency much faster right now as well.

So the argument from BNP Paribas is dead in the water before we even begin.

Anyway, do you think people in, say, Venezuela, really care about any of that?

Escape valve from government stupidity

The government there has trashed the economy and the currency in such a way as to destroy the most oil rich country in South America.

Anyone there would love to have bitcoin.

Bitcoin is an escape valve from governments and their policies all over the world.

Bitcoin is also a perfect example that the natural impulse of humans is to move toward freedom of exchange and association, and away from control and coercion.

It doesn’t mean you’re a criminal, or have something to hide, or are evading anything.

It is a way to rebut overbearing intrusion of governments and corporations into our lives.

We can also add in the rest of the crypto space here as well.

Crypto is often derided as a haven for tax evaders and criminals.

I mean, really?

OK, any area of human life contains those elements, so crypto does as well.

But to slag the whole thing in such a way is ridiculous.

Consider that the ‘respectable’ ANZ and NAB have just settled with the regulator around unconscionable conduct.

And CBA hasn’t covered itself in glory lately with that whole money laundering thing, I presume you’d agree?

The state of Australian banking is such the debate is whether to have a Royal Commission.

And people defend the status quo when it comes to the banking system?

Madness.

Compare that to the developers and programmers in the crypto space that are working to establish privacy and decentralisation as common principles.

Personally, I hope bitcoin and the wider crypto market take the whole sorry edifice of the financial system, and smash it apart.

It might just happen too. That would be a major problem for the ASX/200 – and your super fund – because the big four banks make up so much of it.

I suggest you find out what you need to know to get started in understanding crypto here.

Regards,

Callum Newman
Editor, The Daily Reckoning Australia