Blockchains & Bitcoins

By Alan Kohler | More Articles by Alan Kohler

The related, but separate area of tech excitement at the moment is, of course, blockchain and crypto-currencies, and no one knows what’s going to happen there either, although the interest in bitcoins has become slightly more macabre lately.

The price has fallen for five days in a row, down from US$4950 to US3250 a pop, a fall of 33% so far from the peak. Mind you the peak was eight times what the price was a year ago, so not much damage done.

The correction was sparked by China announcing a clampdown on crypto-currency trading, and then on Thursday, Jamie Dimon of JP Morgan called Bitcoins a “fraud” and likened the boom to the tulip mania of Holland in 1630.

I wrote a column for The Australian a couple of weeks ago calling Bitcoins a “scam”, and poked fun at all the initial coin offerings in another column this week, so Jamie Dimon was just copying me!

But never let it be said I don’t have an open mind! So I called up a “bitcoin educator” called Kiersten Jowett who has a business called Almond Consulting to see what she thought.

“Nobody is an expert yet,” Kiersten told me. “No-one is an expert because the … the technology is changing daily. It has been around since 2009, so for nearly nine years … But still it’s got such a long way to go. It’s an immature infrastructure. The blockchain community, the cryptocurrency community is looking for more regulatory regulation and guidance before it evolves.

“What I like about cryptocurrency is that you can make instantaneous payments. We live in a digital world and our money needs to be digital as well. I was distributing products around the world and it took me days to make a transfer to my manufacturer or to receive a transfer from my clients, and if we had had cryptocurrency it could be instantaneous, just like an email is now. That’s why I’m interested in cryptocurrency. That’s just bringing money up to speed with the technology.

“The other aspect is blockchain, which is really great for business getting an edge and competitive and it saves time and it’s more accurate. Blockchain can be described as a record kept on computers all around the world of transactions that have happened on the blockchain network. There’s no central authority watching the transactions in the way that a bank works.

“The investment side of it is really just a by-product of, or an incidence of Bitcoin. Blockchain technology is really I think the strength everyone’s really excited about. Bitcoin is the money that’s involved and the investment is secondary to what’s really exciting and happening in this tech space.”

But you know what? At the same time as Jamie Dimon was pouring poo on Bitcoins, his staff were in a meeting of the Enterprise Ethereum Alliance, of which JP Morgan is a member. It’s a group of global companies and organisations that got together to research blockchain.

So Bitcoin might be a fraud, but blockchain is not. Just ask Jamie.

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About Alan Kohler

As well as being the founder of The Constant Investor, Alan is currently business editor at large of The Australian, finance presenter on ABC news, presenter of the Talking Business channel on Qantas inflight radio and adjunct professor in the business faculty of Victoria University.

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