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Cryptocurrencies like bitcoin can’t be beaten, so why not join them?

Henry Law says the decentralised nature of cryptocurrency makes it the way of the future. That doesn’t mean it’s perfect, but its flaws are all the more reason for government cooperation and regulation, not repression

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A man talks on a mobile phone during the opening ceremony of the first bitcoin retail shop in Hong Kong in 2014. Photo: AFP

In an age of financial reform, decentralisation enables the removal of third-party intermediaries, as bankers’ and politicians’ words give way to maths, conferring objectivity while preventing anyone in the network from becoming too powerful.

One of Friedrich Hayek’s last publications, Denationalisation of Money , argues that governments should not enjoy the exclusive right to issue currencies. The 2008 financial crisis caused competitive devaluations of fiat currencies to make exports more attractive, inflating national debts at the cost of ordinary people’s savings.

Venezuela citizens protest over the lack of cash in San Cristobal last December, after rampant inflation rendered 100-bolivar banknotes worthless. Thousands took to mining cryptocurrency such as bitcoin for relief during the currency crisis. Photo: AFP
Venezuela citizens protest over the lack of cash in San Cristobal last December, after rampant inflation rendered 100-bolivar banknotes worthless. Thousands took to mining cryptocurrency such as bitcoin for relief during the currency crisis. Photo: AFP

Cryptocurrencies are a bubble, but blockchain is the future: analysts

Such trends have helped fuel the explosive growth in cryptocurrencies outside central banks’ control, and this growth will continue long-term, given that exchange-traded funds for bitcoin and ethereum are expected to materialise.
Compared to rivals like Singapore, Hong Kong is still one of the best places for growth and development of the blockchain industry due to its laissez-faire approach, low tax rate and internet infrastructure. Recently, China has sought to stem the flow of initial coin offerings and ban all trade in digital currencies. With very different legal institutions and administrative constraints, Hong Kong has been largely immune from impulsive edicts that create disturbances in the private sector.

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