Friday, December 3

Crypto assets are here to stay


by Carsten Mumm, guest author of Euro am Sonntag

UIn hardly any other topic are there more stories, myths, unbelievable visions of the future and terrifying doom scenarios like Bitcoin, Ethereum & Co. There are two polarizing camps facing each other in terms of content.

On the one hand are the enthusiasts who are convinced of the emergence of a new global economic order based on the blockchain. For them, Bitcoin is the only true “store of value”, the most effective digital store of value in a world of exploding national debts and amounts of money as well as the ongoing ultra-expansionary monetary policy of many central banks. In their view, so-called fiat money such as the euro and US dollar have the disadvantage, in contrast to Bitcoin, that they have been reproduced at will by a central and politically less and less independent authority for years and therefore excessive inflation and a total loss of confidence appear inevitable.

Other crypto assets, on the other hand, such as Ethereum or decentralized applications built on this blockchain, are viewed as a kind of start-up with a profitable business model in order to disrupt the overwhelming power of today’s, often monopolitical Internet giants or the financial sector. The Internet can be democratized through decentralized applications, many people around the world who have so far barely participated in finance and business life can be given the lack of access, according to the enthusiasts.

On the other side are the skeptics, sometimes even convinced opponents of the newly emerging crypto world. In their eyes it is a huge bubble that must burst sooner or later. At the latest when regulators worldwide recognize that Bitcoin & Co could become a real alternative for existing currencies in the course of increasing acceptance for many people, corresponding limits should be set for further dissemination. In line with this, Jamie Dimon, head of the US investment bank JP Morgan, recently described Bitcoin as worthless, which will ultimately be subject to state regulation. Other prominent arguments of the crypto asset opponents are the enormous power consumption and the supposedly widespread use of crypto assets for criminal activities.

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Most of the people probably stand between these two poles, mostly uncertain about a concrete assessment, sometimes even disoriented or not even touched on the topic at all. They often find it difficult to deal with what at first glance appears to be a very abstract topic. If they try anyway, they are all too often torn between the pros and cons. Own research attempts often end in a hard-to-understand jumble of different information offers on various social media platforms.

The focus is on crypto assets and blockchain

From a higher-level perspective, it is now clear that at least blockchain technology will make a significant contribution to shaping our future – regardless of whether one predicts further price increases or a fiasco for Bitcoin. With this we have already developed an essential distinction and a first step towards increasing the understanding of these digital developments: We have to differentiate between crypto currencies such as Bitcoin, the application of which is primarily aimed at the idea of ​​a store of value or payment functionalities, and other crypto assets such as Ethereum, a platform for the launch of other specific digital applications based on blockchain technology and these applications themselves. It is therefore better to speak of crypto assets in general.

“Come to stay” is the title of our “D & R-TIAM Crypto-Talk”, a joint web conference between the private bank Donner & Reuschel and TiAM Fundresearch from the Finanz Verlag, in which ?? uro am Sonntag is also published . Our goal is to increase understanding of these new and spreading developments. We are sure that the topic of blockchain and thus also crypto assets should be dealt with in principle.

It is not the aim to understand the underlying techniques in detail. Rather, it is about a fundamental understanding of the potentials, areas of application and possible development directions. We speak for this from the perspective of a “non-blockchain expert”, but with a deep understanding of economic and capital market-relevant relationships with various actual blockchain and crypto experts. With their specific knowledge, they help to sort the confusing world of crypto assets and to be able to gradually assess it better.


Carsten Mumm:
Chief economist at the private bank Donner & Reuschel

The Chartered Financial Analyst (CFA) has been Chief Economist at Bankhaus Donner & Reuschel since 2017. His area of ​​responsibility includes the preparation of economic and capital market forecasts as well as the analysis of relevant developments in the entire capital market environment. Before that, he was responsible for the asset management and asset management of the company. The trained banker and graduate economist has been dealing with the capital markets for 25 years.

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Image sources: Donner & Reuschel, Photo Spirit / Shutterstock.com



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