This is a translation of an interview with “DerBrutkasten”.
An statement of the head of the Vienna Stock Exchange, Christoph Boschan, with Austria´s newspaper “Die Presse” has caused a stir in the crypto scene. When asked about Bitcoin, Boschan said that the cryptocurrency was “extremely important for criminal payment transactions”. When the Vienna Stock Exchange is attacked, the payment request comes exclusively in Bitcoin, he continued.
DerBrutkasten: Your LinkedIn post criticising Christoph Boschan’s statements went viral in the crypto scene. What is so wrong about Bitcoin being “important for criminal payments”?
Everything is wrong about it! It shocked and infuriated me that an experienced stock market manager would let himself be carried away by such a statement. Because the statement is not only wrong in terms of content, it also shows that the head of the Vienna Stock Exchange – after all, one of the largest trading venues in Europe – obviously has little idea about blockchain and the transparency of Bitcoin.
What specifically do you criticize about the statement of the head of the Vienna Stock Exchange?
Boschan’s claim that Bitcoin is important for criminal payments is not supported by facts. Bitcoin is much more transparent than cash, for example, due to its public “ledger”. Transactions with Bitcoin are traceable and completely unsuitable for criminal activities. Apparently, this has not yet got around to some criminals and stock exchange bosses.
Europol recently published the IOCTA report (thank you Prof. Markus Büch for the hint), in which they found that only 1.1% of all Bitcoin transactions have a criminal background, the rest are classic investment and trading activities. So there is no question of it being important for criminal payment transactions.
It is obviously a clash of cultures, the classical financial world and that of cryptocurrencies. How do you see the development of stock exchanges? Will trading venues be replaced by decentralized systems?
I believe that in ten years there will be no more stock exchanges, the “trading floor” has had its day. Managers who don’t recognize the signs of the times are accelerating the downfall. People will ask themselves how it was possible that they didn’t see it coming sooner. They did! Except most of the “elderly white men” who sat at the top of these exchanges. Some exchanges, however, are seizing the opportunity of the new digital crypto asset classes and making an effort to enter the world of cryptocurrencies.
The Stuttgart stock exchange offers bitcoin trading with its really cool Bison app, which also appeals to millennials. The Frankfurt Stock Exchange is stepping up its trading in Bitcoin and Ethereum, and Swiss exchanges have been in the Bitcoin business for a long time. The Vienna Stock Exchange is lagging behind. Although it allows trading in cryptos indirectly via two ETPs, the offer is half-hearted. Christoph Boschan admits in a press interview that the ETPs are only traded “to some extent”. This is not surprising, because if you put Bitcoin in the criminal corner, you should not be surprised if buyers stay away.
Bitpanda shows that it is possible to be successful with Bitcoin & Co. The Viennese crypto-fintech specialised in cryptocurrency trading early on and has a securities licence. Recently, it was announced that Bitpanda will soon also allow you to invest in shares, even in parts – you no longer have to buy the whole share! This is new and offers opportunities for small investors.
For me, this is a sign that classic stock trading venues are facing massive competition: The Austrian FinTech start-up Morpher maps share prices on the Ethereum blockchain, so shares can be traded around the clock. This also makes the stock exchanges look old.
How do you see the future of Bitcoin, is it an effective means of hedging against impending inflation?
You often hear that the massive Corona bailout programmes will lead to dramatic inflation. I am skeptical about that. Josef Stigilitz, former chief economist of the World Bank, recently said in an interview with Handelsblatt that the inflation warners are completely off the mark. Both monetary and fiscal policy could immediately take countermeasures if, contrary to expectations, inflationary pressures were to arise. Somehow I sense that he is right: the European Central Bank is criticised precisely because it is so consistent and unflinching in countering the threat of inflation.
However, Bitcoin is important for other reasons, and this has been appreciated by institutional investors since last year: Bitcoin is the new “digital gold”, an excellent store of value. The criticism that Bitcoin is a pyramid scheme, a tulip mania, is not justified. The same could be said about gold. The precious metal is still used industrially, but it is often replaced by platinum or other alloys, and thus has no real industrial function. Bitcoin, on the other hand, may become more important for payment transactions in the future. This also emerges from a much-noted study by analysts at Citi Bank.
And there is another important aspect to Bitcoin: the cryptocurrency is based on a computer program. No government or central bank can fire up the Bitcoin printing press according to its whim or need for money; there are and remain a maximum of 21 million Bitcoins that are gradually mined by miners. And this idea of the total political independence of Bitcoin is particularly appealing to many investors.
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