The World in Cryptocurrency: Besting JPMorgan, & The Colonial Currency Allegory

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The total market value of cryptocurrencies on Wednesday hit an all-time high today. And oh not just that, but it also surpassed the value of United States’ largest bank. Yeah you read that right, it surpassed JPMorgan – the US’s largest bank when it hit a record $370 billion at 6:50 am London time Wednesday December 6, 2017, according to data from Coinmarketcap.

JPMorgan, which has its current total value sitting at $366.8 billion was bested by the cryptocurrencies thanks a great deal to Bitcoin, the largest of them all. The value of the cryptocurrencies is said to be calculated by multiplying the prices of the individual digital currencies by the total amount of those cryptocurrencies that are still in circulation.

Thank You Bitcoin

The cryptocurrency market’s value was boosted largely by Bitcoin’s rise to 12,000 USD on Wednesday and people are believing this figure is going to rise higher as most people will be conducting lots of transactions especially in this festive season of Christmas. More to that is the fact that Bitcoin’s value will also rise higher as more institutional money will begin to flow into it in the near future. Simply put, more institutions are considering the prospect of introducing future contracts that will allow the use of Bitcoin. These contracts they believe will enable traders who use Bitcoin to come to terms to buy or sell goods or assets at an already determined price even at a later date. This is an effort to enhance hedging and price movement speculation in order to help reduce greatly the volatility of Bitcoin.

The Jamie Conundrum

Image of Jamie Dimon of JPMorgan

Well, this isn’t good news for everyone as it looks or sounds as Chief Executive of JPMorgan, Jamie Dimon has always been an outspoken critic of Bitcoin calling it a fraud among several other things.
Other cryptocurrencies that contributed to the rise of the total market value were IOTA. IOTA saw a rather good upward trend on Wednesday as it hit $5 for its first time after a 90% increment in the previous 24 hours. This could be largely due to the fact that it had made some partnership deals with big guns like Microsoft and Samsung.

The Continental Money

For those who are very much abreast with the history of the United States of America, “the continental money” will definitely ring a bell to you. This was an acclaimed fiat currency that was issued in the year 1775 by the Continental Congress as a legal tender in an effort to finance the Revolutionary war of that time. “The Continental money” only lasted for seven years as it collapsed and became of no value in the year 1782.

Alan Greenspan, the former Chairman of the Federal Reserve, has compared the very successful Bitcoin to this “continental money”. He believes that despite Bitcoin’s success as a currency that does not have an actual commodity backing it, it is in essence very similar to the continental money. He is right in a sense, in that the continental money did not have any commodity backing it. Its worth was in the demand for it and not by the backing of any actual commodity whose value in turn determined the worth of the currency. Bitcoin as a cryptocurrency does not have any commodity like gold backing it, its value is determined by just how much people demand it.

Mr. Greenspan in highlighting on the continental money said that “a significant share of it was creating real goods and services”, even though it still ended up as a worthless currency. For him, despite Bitcoin having appreciated by a 1,200 percent in 2017 alone, it could still end up as worthless currency. He also said that the ability of bitcoin to meet people’s demand of it was key to determining whether its value was fugacious or not. Looking back, the continental money was also valuable during the time of the war for payment of armaments and other war supplies, and yet it ended up collapsing in value. Bitcoin is a reincarnation of the continental money to Greenspan and more so, he thinks it could even be of absolutely no value at all. He added that “humans buy all sorts of things that aren’t worth anything” and that people gambled in casinos even when the odds were against them, but that still did not stop anybody from gambling.