◇ Cryptocurrency Being Publicly Criticized by Prominent Figures

■ Cryptocurrency criticized

Recently, the cryptocurrency has been publicly criticized by prominent figures. They deny cryptocurrencies head-on, with comments such as “Cryptocurrencies are no good” or “Cryptocurrencies are pyramiding schemes”.  However, given that the topic is taken up among only a small number of users and related parties, is it too optimistic to say that “it will dominate the financial system in the near future”?  U.S. President Trump tweeted, “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity…. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!” In other words, President Trump was saying that “Crypto Assets are no good, and the U.S. Dollar is the strongest”. One thing to note is that this was the first time for President Trump to use the word “Bitcoin” on Twitter. The background to this tweet was that he refuted to Chairman Powell’s statement that he recognized that the current financial system dominated by the U.S. dollar may by changed completely in the future by crypto-assets. “What will President Trump tweet next?” President Trump’s tweets are now paid attention to by the entire world, and has great influential power. Given his tweet, the Bitcoin market initially surged by 6.8%, but the increase was later erased. However, the fact that he mentioned “Bitcoin” for the first time means that the President of the U.S. recognized that Bitcoin’s existence “cannot be ignored”, and is implicating that the diffusion of cryptocurrencies is accelerating. In particular, the weaknesses of crypto-assets pointed out by the President is not necessarily far-fetched such as the comment that “(cryptocurrencies) can facilitate unlawful behavior, and “value is highly volatile”, however, this is because a major part of trading of crypto-assets is for speculative purposes, but this fact itself is not a weakness. In the future, if cryptocurrencies begin to be used for ordinary settlements, and if Bitcoins are permitted and recognized as safe assets, then the price should stabilized more than today, and also as there are restrictions on the total number of coins which can be issued and also given that the number of new issuances is gradually decreasing, which should make it strong against inflation, and price increase is anticipated in the long-term. President Trump’s tweet triggered such re-recognition. Regarding price, legal tender such as the “U.S. Dollar” is based on the credibility of the government, and the credibility of crypto-assets is generated by the credibility of blockchains, and also given that new issues are controlled, it is possible to remit money without going through the hands of a third party is possible based on such credibility, and is value in itself. In sum, President Trump’s comments have brought about the future potential of crypto-assets. Also, there is one prominent person who is publicly denying cryptocurrencies with a loud voice within Japan. The name will not be mentioned here, but the person proudly appealed against it with a big smile when giving speeches on the street for the election of the House of councilors. From the speech, it was apparent that the person had very little knowledge of cryptocurrencies. First of all, the person stated that “Cryptocurrencies and pyramid schemes are the same”. To begin with, cryptocurrencies has no entrance fee as in pyramid schemes, and it is not a scheme where losses will be incurred if members are not increased. The accusations are completely false. We can venture to say that “there is a chance that cryptocurrencies may be used in pyramid schemes”. The person also excitedly said that “Cryptocurrency has no wealth as a basis”. The fact that there is no wealth as a basis is the same state as the money in your wallet, and it is used because people believe it has value based on the credibility of the government, and there is no material such as underlying gold as its basis. The person should learn that, in the case of cryptocurrencies, value is generated by the credibility of blockchains. The person also stated that, “The decisive weakness of cryptocurrencies is that they are extremely weak against cyber-attacks”. Surely, there have been many incidents where cryptocurrencies have been stolen by hacking of the exchanges. It is fact that exchanges were hacked by cyber-attacks, and it merely showed the limitations of security technologies using open-key methodologies, which is the cryptographic technology of today. The most ridiculous “logic” was the point that cyber-attack groups in China and North Korea are aiming to attack when Japanese affluent people transfer their assets into cryptocurrencies. Perhaps it is an idea for a spy film, however, such a childish conspiracy movie will most likely be ignored from Hollywood. The person also told stories that Japan’s megabanks which issue cryptocurrencies and the two countries are connected, and it is too far-fetched. In other words, the person is just fueling fear towards cryptocurrencies, and connecting it with crimes and nosedives. When a new technology is introduced, there are always people that try to find faults by splitting hairs. A person engaged in politics should not just blindly say “no”. Politicians should be responsible to think about how to use and grow such new technologies, and how it may be used in the industry. Instead of using poor imagination, politics should be based on active imagination. The above being said, the fact that cryptocurrencies come up as topics of debate in Japan and around the world is meaningful in that it will promote the correct understanding of cryptocurrencies, and at the same time it is anticipated that it will significantly spread cryptocurrencies. It is good news for users and related parties, and in particular, the fact that flames have ignited from Washington D.C. is a great blessing.