A Google search for "Bitcoin tipping point" returns
165,000 results dating as far back as 2013. That's a lot
of talk. But now, four years on, there are compelling reasons
to think that we're getting closer to that tipping point
– and to think that the decision last year by Jersey's
regulators and politicians to create a "regulatory
sandbox" for crypto-currencies was the right one.
Last month the price of Bitcoin made headlines for hitting a
three-year high, bypassing the $1,120-mark, before quickly dropping
away again. That price is still some way short of the $1,216 record
set four years ago, but given the Brexit referendum result and the
result of the US presidential election, Bitcoin is far from the
only currency to be affected by uncertainty.
In fact, Bitcoin is no more or less volatile than fiat
currencies were at the point that they were introduced – and
there's speculation that the price will break the $2,000
barrier this year.
More important than the price is the fact that the number of
weekly Bitcoin transactions has more or less doubled in the last 12
months, showing that the use of crypto-currency (not just Bitcoin,
but also Ripple, Ethereum and others) is becoming more frequent and
And that's what suggests that we're approaching the
"tipping point" – the phrase popularised by Malcolm
Gladwell's 2000 bestseller referring to the moment in which a
trend or behaviour achieves critical mass and jumps into the
mainstream (think about the points in the last few years in which
mobile phones, social media accounts or online shopping went from
fringe to ubiquity).
For all the talk about anonymity, one of the main selling points
for Bitcoin from a personal as well as a commercial point of view
remains the ability to transfer money across borders quickly and
without losing value through exchange rates or transmission fees.
That has fuelled use particularly in China, where crypto-currencies
are widely thought to be a popular way of getting around measures
put in place to stop people moving money out of the country.
The increasing usage of Bitcoin suggests that the work by
Jersey's politicians and regulators to create a
"regulatory sandbox" for crypto-currencies was worthwhile
and prescient. The sandbox allows developers and innovators working
with virtual currencies to build, test and experiment with
products, services, business models and delivery mechanisms in a
live environment without immediately incurring all the normal
regulatory consequences and costs.
To require start-up developers and innovators to bear the full
brunt of compliance with Jersey financial services laws and
regulations would limit such activity taking place in the Island.
And by setting a turnover threshold of £150,000 (the
"economic threshold" test) before they have to be subject
to active supervision under the Proceeds of Crime (Supervisory
Bodies) (Jersey) Law 2008 and be liable for an annual fee, the
government and regulator have created an environment in which
testing and development of virtual currency applications can
Since then, the Channel Islands Securities Exchange has become
the first exchange anywhere in the world to list a regulated
Bitcoin fund – the Global Advisors Bitcoin Investment Fund
PLC – which shows that the Island is developing its
regulatory apparatus and technical expertise in this area.
The brains behind that firm are not alone - over the last 12
months most major banks and major financial services firms have
been linked to pilot blockchain/Bitcoin projects moving to proof of
concept projects, and we can expect to see roll-out in 2017.
No one knows when the "tipping point" for
crypto-currencies will be reached – but it's clear that
it has the potential to disrupt currency in the same way that
Spotify and iTunes have disrupted music sales, that Uber has
disrupted taxi services and that eBay and Amazon have disrupted
Jersey appears well-placed to take advantage when the tipping
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Jersey's Royal Court has ruled that a house and land in St Helier which were left in a will to a UK body with charitable status (the "Charity") which could not take ownership of them could pass to a company...
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