The rapid rise of cryptocurrencies and their spin-offs has sparked a lively debate in our newsrooms. Handelsblatt decided to take it public.
Pro regulation
It sounds like a great investment, with its price increasing 17 times since the beginning of the year. And Bitcoin disciples assure that its meteoric rise is far from over. After all, the cybercurrency with its distinctive “B” logo is expected to revolutionize the world’s payment systems and ultimately sweep away the old regime.
What could go wrong? Everything. The miraculous multiplication of money is at best a gigantic bubble – and at worst a pyramid scheme for unsuspecting private investors. Yes, the technology behind Bitcoin is fascinating and could potentially transform the entire financial system many years from now. But Bitcoin itself? It hardly has any intrinsic value. Paying with cybercurrency is expensive, insecure, extremely slow and inefficient. The exorbitant increase in the price of Bitcoin is purely speculative. More and more investors are attracted by the promise of getting rich quickly.
What’s the problem? Doesn’t everyone in capitalism have the right to ruin themselves financially? Of course they do. But the government should ensure that this is done fairly. And it doesn’t look like that’s the case here. Bitcoin exchanges are unregulated and thus open to cheating, manipulation and price-fixing.
The next big financial scandal could well be lurking behind Bitcoin mania.
What has long been banned on stock markets – such as price-fixing and insider trading – has has so far been neither monitored nor punished on crypto exchanges. Worse still, trading in Bitcoins is like a giant pyramid scheme. A small but sophisticated Bitcoin aristocracy owns most of the cybercoins. Those who are getting in now will mainly increase the price gain for this early generation. These early investors ultimately control when they decide to get out, bringing the pyramid crashing down in the process.
It is absurd: While the lessons of the financial crisis have led to investment advisors being overwhelmed with rules that are sometimes completely exaggerated, it’s the Wild West when it comes to Bitcoin trading. Claiming investor protection here, as is customary in the stock market, has nothing to do with a call for paternalistic intervention. If the government does not act, enormous damage will be inflicted on our already underdeveloped investment culture, especially since the next big financial scandal could well be lurking behind Bitcoin mania.
English writer John B. Priestley said that an optimist is usually someone who is poorly informed. But sometimes it’s someone who is simply being had.
Read more at:
https://global.handelsblatt.com/opinion/an-argument-for-and-against-bitcoin-intervention-867652
