National currencies will become less due to the Bitcoin evolution

There are currently 162 national currencies worldwide. Many of them are obsolete and will have disappeared within the next few decades. The reason for this is that more and more states are joining together to form monetary unions. In addition, there are currency substitutions such as dollarisation as in Panama, Ecuador and El Salvador. The euro has already reduced the number of national currencies by 18, thus significantly restricting forex trading and the underlying assets in binary options trading. Providers such as therefore notice a sharp decline in the diversity of foreign exchange trading when comparing the offers of the various brokers. In addition, there are 9 other possible future euro states, so that the number of European national currencies could fall further. Also South America, Africa, the Gulf states and Asia could realize plans of a uniform currency in the future.

Africa plans Afro by 2028 through the Bitcoin evolution

The Abuja Treaty of 1991 established the African Economic Community and covers almost all of Africa. The treaty provides for the introduction of Bitcoin evolution Afro by the African Central Bank by 2028. Egypt, Swaziland and Lesotho, however, expressed their support for a delay of up to three years at the beginning of 2008. Cape Verde and the Seychelles want to consider joining at a later date due to economic fears. Africa already has the common Bitcoin evolution currency area of South Africa, Swaziland, Lesotho and Namibia.

Single currency in Latin America has so far failed due to lack of Bitcoin evolution

At the three summits of the 12 South American presidents, the Declaración del Cusco was adopted, which wants to implement a common market and a Bitcoin evolution common currency in addition to a South American parliament. However, concrete plans and timeframes for implementation do not yet exist. The reason for this is also the lack of cohesion due to different political orientations. While some South American states work closely with the US, this is problematic for the left-wing states. They introduced the Bitcoin evolution at the beginning of 2010, which after all represents a common calculation currency, but currently exists only as book money. The aim is to reduce dependence on the dollar. In contrast, Ecuador and El Salvador have already separated from their national currencies and are treating the US dollar as their only means of payment.

However, the Union of South American Nations, which was signed by twelve South American states in 2008, offers hope for a currency unit.

The Gulf currency area
The Cooperation Council of the Arab States of the Gulf was founded in the 1980s due to the difficult political situation in Iran and Iraq and provided for the introduction of a single currency by 2010. However, the timetable could not be met. After the surprising announcement at the end of 2013 of the introduction of the single currency within just one month, the press release was revoked shortly thereafter. It remains unclear exactly when the single currency of the Gulf states will be introduced. However, it is considered relatively certain that a single currency will be implemented sooner or later.

Asian monetary union not currently planned
The Asian Currency Unit (also ACU) is to apply to the ten countries of ASEAN, the People’s Republic of China, Japan and South Korea. The model for the ACU is the European Currency Unit. The step towards a common currency is currently not planned. The ACU, on the other hand, is to function more as a currency basket and show regional exchange rate fluctuations.

Caribbean Community
The Caribbean Community is an international organisation founded in 1973. Although there is currently no concrete plan for a monetary union of the 14 states, this cannot be ruled out for the future because of the close economic ties.

Horror scenario Bitcoin ban: Can states paralyze the Bitcoin?

One of the central advantages of blockchain technologies is decentralization. Ultimately, it should also ensure that there is no single authority that can influence or even paralyze the system. Nevertheless, is the Bitcoin safe from an official ban in some countries in times of the cash ban and with the abolition of the 500 euro note similar tendencies in Germany?

Bitcoin evolution: We don’t care about politics

First, it should be examined whether there is a purely technical point of attack with which a central party can prohibit Bitcoin evolution.

In contrast to a platform or a Bitcoin evolution company, which is always assigned to those responsible who can be forced to paralyse operations, Bitcoin would generally have to prohibit the operation of miners and nodes. Difficult, because it is a decentralised system. This possibility seems to be difficult to enforce, because then all participants of the system would have to be excluded, which is almost impossible.

51% Attack: When Father State Controls the Blockchain

A 51% attack? This would mean that states interested in paralysing the Bitcoin system could gain the majority of mining power and manipulate transactions. This attack is never ruled out, but unlikely if it is a civilised state that does not see the Bitcoin as a serious crime and therefore would not itself initiate questionable attacks.

But: Due to financial conditions such as electricity costs, it is much easier or more profitable to operate Bitcoin Miners in certain regions. In the long run, this can lead to a centralisation of mining power to a few locations. The problem with this fact is that if a government in a region that provides more than 50% of the hash power gains access to the miners by controlling the traffic, it could gain full control of the Bitcoin system by attaching „wrong“ blocks to the block chain.

Bitcoin ban: weak point market
The technical possibilities with which authorities or heads of state could paralyze the Bitcoin seem possible, but limited and can only be implemented with great effort.

The situation is quite different in the world outside the blockchain technology: Finally, in order to use Bitcoin as a means of payment, it is necessary to be able to use marketplaces for exchange in fiat currencies for as long as the Bitcoin system is not yet fully accepted in itself, i.e. participants could live their entire lives with Bitcoin as a means of payment.

Marketplaces now differ from Bitcoin in that they have a central operator who is responsible for the platform. In addition to the possibility of forcing this operator to discontinue its service, there is also the option of fundamentally prohibiting Bitcoin trading. This would not prohibit the Bitcoin itself, but depending on the region that is excluded from the Bitcoin, the crypto currency would lose considerable trust and value.

What could Bitcoin bans look like in practice?
Since I personally consider a sudden Bitcoin ban to be unrealistic, the thought process of the ban begins with communication. In the following I will therefore describe a possible, purely imaginary course in which a state could curb Bitcoin by resorting to methods that are not always legal. The state will first publicly and largely propagate the risks and disadvantages of Bitcoins or crypto currencies. The currency thus suffers a strong loss of confidence in the region. People who had only a moderate interest in it stop using the crypto currency out of conviction of the disadvantages. A resulting exchange rate loss is not excluded.

In order to approach the broad mass of Bitcoin users, the state tries to restrict access to the Bitcoin outside the actual cryptosystem. Marketplaces for crypto currencies are either subject to obligations that are difficult to fulfil, making it increasingly difficult and inaccessible for users to use these platforms. After taking the simplicity away from the marketplaces as one of their USP’s, they will try to make them disappear altogether. Arguments such as money laundering support are used to paralyze the stock markets.

Customers now only have the option of using foreign marketplaces or less widespread trading models such as cash purchase. Since they are very likely to use credit transfers or credit card payments there, financial institutions and banks will be obliged to block these payments for reasons of money laundering prevention.

Metcalfe and the future of Bitcoin

Using a formula by Robert Metcalfe, Tom Lee claims to have found a way to explain Bitcoin’s price fluctuations. He compares Bitcoin to a social network whose value increases with the number of users.

The calculation method is based on Metcalfe’s formula, which says that the value of a communication network increases proportionally to the root of the number of participants in a network or the number of possible connections between the participants.

After that, a course correction should take place

So far, Bitcoin has been traded at a price above the formula. FundStrat is optimistic in its analyses, but considered a price correction, as it seems to be taking place at the moment, to be realistic.

„Using a very simple formula to calculate the benefit of Bitcoin as a square function of the number of participants and the average transaction value, 94% of Bitcoin’s movements over the last 4 years can be explained,

Tom Lee, co-founder of FundStrat, a financial research institute in an interview with business insiders.

94% Accuracy with Metcalfe

A fax machine can be used as an application example for Metcalfe’s law. If only one person on earth owned one, it would be quite worthless and above all useless. The faxes that this person would send to himself would probably have only limited value even for him. However, the more people who own a fax machine, the more valuable it becomes.

This law can be easily transferred to social networks. Facebook isn’t necessarily that valuable because it’s technically outstanding or innovative. The main value and benefit of Facebook is that so many people use it. So Metcalfe’s law applies: the value of a network is proportional to the root of its number of subscribers. So the value in terms of benefit increases with the number of participants:

„If you double the number of participants, you increase the benefit many times over, not by half.“

Lee says the law can also be applied to Bitcoin. FundStrat took a closer look at the network and found out that the root function of clearly assignable addresses as an indicator for users can explain 63% of the Bitcoin price fluctuations since 2013.

„From a previous point of view, everything suggests that Bitcoin is very much like a social network. The more activity takes place, the more the value increases. And in the short term, we think that Bitcoin will at least break the $6,000 mark in mid-2018.“

That’s what he said in October.

After Metcalfe’s law could only explain 63% of the fluctuations, they added the transaction volume as a factor to the already described model. The accuracy rose to 83%.

Finally, FundStrat has developed a formula that offsets the Bitcoin price with both the root of the unique addresses and the transaction volume per user. This model actually explains 94% of the price fluctuations since 2013.

Metcalfe’s Law and the Future of Bitcoin
Finally, FundStrat can use this formula to estimate the future value of Bitcoin. You need an estimate of the number of unique addresses (or their roots) and an estimate of the transactions per day. Lee comes to the conclusion:

„Bitcoin’s trend is positive in the long run. But in the short run the price seems to be limited, the risk of a price correction seems to grow.“

The current price fluctuations seem to prove Lee right so far.

What happens next?
According to this law, more and more participants would have to discover the crypto currency for themselves in order to let the price rise further. Lee shows parallels between Bitcoin and gold. He assumes that Bitcoin will be the digital gold of the future generation. With the most cautious estimates, he predicts a price of 25,000 US dollars per Bitcoin.

The price could ultimately also be subject to extreme fluctuations. This is the case, for example, when investors discover the crypto currency for themselves. Since they can suddenly pump a large amount of money into the cycle, the overall value can rise sharply for a short time. This is because, in this sense, they are still regarded as a single user, even though they represent a large number of people. Therefore, after a high price increase, corrections can occur again and again. Whether the future will prove Tom Lee right remains to be seen. It remains exciting.