The Future of Money

Why Crypto-Currency Will Define How We Do Business

Three reasons cryptocurrency is likely to be ‘the future of commerce’

by Brian Sewell

Mr. Sewell is the founder of Rockwell Capital, a family office committed to educating investors about cryptocurrency, and Rockwell Trades, an institutional cryptocurrency trading platform. He may be reached at

I would rather see the SEC make a methodical decision, with thoughtful guidelines, to approve a cryptocurrency ETF than a rash decision to reject one. And though the agency may not reach a final decision until next year on the proposed SolidX Bitcoin Shares ETF, I think the agency will eventually approve it. The proposal (requiring a minimum investment of 25 bitcoins, or $165,000, assuming a BTC price of $6,500) seems to meet the SEC’s criteria — on valuation, liquidity, fraud protection/custody, and potential manipulation.

Cryptocurrency’s Challenges and Potential

Since 2010, when it emerged as the first legitimate cryptocurrency, bitcoin has been declared “dead” by pundits over 300 times. Critics have cited the cryptocurrency’s hair-raising price volatility, it’s scalability challenges, or the improbability of a central bank ceding monetary control to a piece of pre-set software code. Yet since 2009, bitcoin has facilitated over 300 million consumer payment transactions, while hundreds of other cryptocurrencies have emerged, promising to disrupt a host of industries. Granted, no more than 3.5% of households worldwide have adopted cryptocurrency as a payment method. But I think cryptocurrency will transform how the world does business as developers, regulators, and demographics resolve the following key issues:

1. Approval of a Bitcoin ETF
I think the US investment community will not rest until they satisfy SEC criteria for a bitcoin ETF. Approval would represent another milestone in the validation of cryptocurrencies. This bodes well for the global financial system, because cryptocurrency promises to create financial savings and societal benefits — by streamlining how the world transacts for goods and services, updates mutual ledgers, executes contracts, and accesses records.

2. Comprehensive U.S. Regulation Can Improve Protection, Innovation, and Investment
Demand is mounting for a larger, more comprehensive U.S. and global regulatory framework that protects consumers and nurtures innovation. Those institutional investors who are assessing the cryptocurrency risk/reward proposition are also awaiting regulatory guidance and protections to honor their fiduciary duties. How, if at all, for example, will exchanges be required to implement systems and procedures to prevent hacks and protect or compensate investors from them?

Effective cryptocurrency regulation requires a nuanced set of rules, a sophisticated arsenal of policing tools, sound protocols, and well-trained professionals. I think U.S. regulators will eventually get it right. And if institutions become more confident that regulations can help them meet fiduciary duties, even small cryptocurrency allocations from reputable organizations could unleash a new wave of investment.

3. Bringing the Technology to Scale
Bitcoin and other cryptocurrencies cannot yet process tens of thousands of transactions per second. I think developers working on technology — such as Plasma, built on Ethereum, and the Lightning Network, for bitcoin and other cryptocurrencies — will sooner or later bring leading cryptocurrencies to scale. This could unleash an explosion of new applications, allowing cryptocurrency to integrate with debit and credit payment systems, developing new efficiencies in commerce — whether B2B, B2C, or B2G — in ways we can’t fully anticipate.

4. Developing World Incentives and Demographics
Cryptocurrency adoption as a payment method could grow fastest in emerging markets. Many consumers and entrepreneurs in such regions have a strong incentive to transact in cryptocurrency — either because their country’s current banking payment system is inefficient and unreliable, and/or they are one of the world’s 1.7 billion “unbanked.” Two-thirds of the unbanked own a mobile phone, which could help them use cryptocurrency to transact, and access other blockchain-based financial services.

Data underscores the receptiveness of Developing World consumers to cryptocurrency. The Asia Pacific region has the highest proportion of global users of cryptocurrency as a transaction medium (38%), followed by Europe (27%), North America (17%), Latin America (14%), and Africa/The Middle East (4%), according to a University of Cambridge estimate. Although the study’s authors caution that their figures may underestimate North American cryptocurrency usage, they cite additional data suggesting that cryptocurrency transaction volume is growing disproportionately in developing regions, especially in:

  • Asia (China, India, Malaysia, Thailand)
  • Latin America (Brazil, Chile, Colombia, Mexico, Venezuela),
  • Africa/The Middle East (Kenya, Saudi Arabia, Tanzania, Turkey)
  • Eastern Europe (Russia, Ukraine).

Demographics will also likely drive cryptocurrency adoption in the Developing World, home to 90% of the global population under age 30.

Remember The Internet – Investment Bubbles and Bursts Will Identify The Winners

High volatility is inherent in the investment value of this nascent technology, due to factors including technological setbacks and breakthroughs, the impact of pundits, the uneven pace of adoption, and regulatory uncertainty. Bitcoin, for example, generated a four-year annualized return as of January 31st 2018 up 393.8%, a one-year 2017 performance up 1,318% — and year-to-date, a return of down over 50%. Bitcoin has previously experienced even larger percentage drops before resuming an upward trajectory.

bitcoin and other cryptocurrencies will experience many more bubbles and bursts, in part, fueled by speculators. But the bursting of an investment bubble may signal both a crash and the dawn of a new era. While irrational investments in internet technology in the 1990’s fueled the dotcom bust, some well-run companies survived and led the next phase of the internet revolution

In my view, bitcoin and other cryptocurrencies will experience many more bubbles and bursts, in part, fueled by speculators. But the bursting of an investment bubble may signal both a crash and the dawn of a new era. While irrational investments in internet technology in the 1990’s fueled the dotcom bust, some well-run companies survived and led the next phase of the internet revolution. Similarly, I believe a small group of cryptocurrencies and other blockchain applications, including bitcoin, will become integrated into our daily lives, both behind the scenes and in daily commerce.

Although “irrational exuberance” will continue to impact the price of cryptocurrencies, this disruptive technology represents not only the future of money, but of how the world will do business.

Appendix A – Details On the Proposed SolidX Bitcoin ETF

The proposal seeks to list and trade shares of SolidX Bitcoin Shares, an Exchange Traded Fund (ETF) issued by the VanEck SolidX Bitcoin Trust, on the Cboe Exchange (The Chicago Board Options Exchange, specifically the Cboe BZX Equities Exchange.

Shares – The Fund will be backed by actual bitcoins. Each share will equal 25 bitcoins, which totals $165,000 USD assuming a bitcoin price of $6,500.

The SEC could approve or reject the proposed fund by the end of September, or the SEC could postpone a decision by as much as 240 days from its July 2nd posting, which would mean by March 4th, 2019 at the latest.

Security – The ETF bitcoins holdings would be insured to protect shareholders from exchange hacks and other fraudulent activity.

The Chicago Board Options Exchange – The CBOE is a well-established, recognized and regulated exchange, the first to be approved to list bitcoin futures.

The Issuer – VanEck is an award-winning investment and money manager, which operates more than 70 ETFs and ETPs.

Solid X – Brings expertise in blockchain and bitcoin capital markets, consulting services, and software development.

On July 20th, VanEck and SolidX wrote a letter to the SEC outlining how it had addressed the agency’s concerns.

Appendix B – The Fundamentals – What Cryptocurrency Has Going For it

The Value Proposition
While the internet enabled the peer-to-peer exchange of digital communications, blockchain technology enables the peer-to-peer exchange of value, without needing a trusted third party to authenticate transactions. Blockchain technology instead provides a system of trust vested in a process: of open source software, a digital peer-to-peer transfer system, checks and balances, math-based incentives, software encryption, and an online chain of public transaction records. Blockchain technology thus promises a myriad of applications to instantaneously transact, initiate contracts, update ledgers, or share databases, in a way faster and cheaper than current alternatives.

Bitcoin represents the first blockchain application and the first cryptocurrency, promising secure, efficient digital payments. At its current stage, bitcoin has particular appeal in emerging economies that lack a secure, robust system for financial payments. Both digital payments and cryptocurrency represent only one of countless potential applications of blockchain technology. As bitcoin and other cryptocurrencies evolve to achieve “scalability,” to process tens of thousands or more transactions per second, more applications will likely proliferate that integrate bitcoin and other cryptocurrencies, notably in the rapidly evolving fintech space.

Poised to Change How the World Does Business
Though blockchain technology faces challenges, the technology is changing virtually every sector in the U.S. and around the globe, from financial services and health care, to international shipping and economic development– promising swift, secure applications for the exchange of goods and services, the update of mutual ledgers, the sharing of records, the transfer of property ownership, and the execution of contracts.

The use of blockchain technology by financial institutions already reached the early adoption phase in 2016, according to Accenture. And it’s estimated that fully 10% of world GDP could be stored on blockchain technology by 2025, according to a World Economic Forum (or by 2027 according to Deutsche Bank.)

While a central authority can unilaterally inflate a traditional currency by printing more money, a legitimate cryptocurrency has an anti-inflationary process built into its code. Bitcoin’s, for example, limits the production of monetary units to 21 million by 2140. This feature could make bitcoin, or its peers, viable alternatives in countries with dysfunctional economies, where currencies have lost both value and public confidence.




The World Bank,The Global Findex, 2018,\en\news\press-release\2018\04\19\financial-inclusion-on-the-rise-but-gaps-remain-global-findex-database-shows
Global Cryptocurrency Benchmarking Study, Dr Garrick Hileman and Michel Rauchs, University of Cambridge, Judge Business School, 2017 (sponsored by Visa), figure 97, p 109
Global Cryptocurrency Benchmarking Study, p 108. Source:\historical (accessed: 24 March 2017)