The long-term fate of cryptocurrencies in Europe has been given a boost by the European Parliament Committee on Economic and Monetary Affairs. Following a detailed review of the industry and its underlying technology, the political body has formally acknowledged that cryptos such as Bitcoin, Ripple and Litecoin have an inherent value.
“Their value is determined by the law of supply and demand, relying on potential exchanges for other goods or sovereign currencies, and it is not backed by any monetary authority (decentralized character),” reads the July 2018 report.
The Tide is Starting to Turn
By stating that cryptocurrencies are a “digital representation of value,” the analysts have aligned BTC, XRP and other altcoins with fiat currencies. For those invested in the market, this has always been the case. However, with non-tech experts and politicians now acknowledging the facts, the tide appears to have turned. In the short term, the report is likely to help the price of Bitcoin. Alongside the categorization of cryptos as real currencies, the report specifically discusses the impact Bitcoin has had on the world.
“Other innovations with a relevant impact in the financial sector are the new cryptocurrencies, like Bitcoin, which are digital currencies that operate in a decentralized way by means of P2P technologies, like blockchain, and without participation or supervision by any central bank or institution,” the report continues.
Digital Value Verdict Translates into Real World Value
In the hours following the publication of the report, Bitcoin price charts across the internet surged. Although the value dipped in the final hours of July 25, BTC peaked at $8,431 to continue its two-month upswing. Despite Bitcoin’s dominance rating topping 46% in recent weeks, the rest of the market is bound to react positively in light of the report. Indeed, one of the industry’s biggest shortcomings over the last decade has been convincing the masses that it can be a real currency. Even though blockchain innovations, Ethereum smart contracts and decentralized payment systems like xRapid have shown the power of this technology, their impact is limited to the tech sector.
However, as companies such as Walmart and Opera show the practical applications of crypto technology, consumers are starting to appreciate their worth. The trickledown effect is the realization that Bitcoin et al have a real utility. Indeed, as the recent report by Imperial College London explained, cryptocurrencies do have the power to replace fiats. The European Parliament Committee clearly agrees with this line of thinking, which is something that bodes well for the future of the industry.
A Plethora of Positive Potential for the Future
At this stage, the report won’t usher in any legal or political change recommendations. However, the conclusions drawn may well influence crypto-related policies in the future. For the canny investor, this could be the time to buy Bitcoin, Ethereum or any of the other major altcoins. Financial markets often fluctuate off the back of a major report and the latest findings are bound to result in more investments over the coming months. However, perhaps the most interesting area of investment could be mining. Although it failed to outline any remedies, the report noted Europe’s lack of representation in the mining sector.
“Nevertheless, the main weakness of Europe is the concentration of the mining activity on non-European countries (Europe only captures just 13% of the current mining market),” the report said.
Should European governments take this as a call to action, investors may soon be looking to investing in mining companies. Although the current stranglehold China has on mining (in particular, Bitcoin mining) will be hard to break, Europe could reduce the deficit. By offering financial incentives and technical support to mining companies, governments could carve out a niche in the mining sector. If that were to happen, it would undoubtedly benefit crypto investors and businesses in Europe. What’s more, it would help the industry as a whole. By introducing some parity to the market, incidents such as power outages in China wouldn’t have as much impact on the digital economy as they currently do.
Whatever actions result from the European Parliament Committee on Economic and Monetary Affairs’ report, the reaction has been positive. The price of Bitcoin has increased and that could lead to another uptick in the number of people wanting to buy cryptocurrencies. Although experts will urge caution at this stage, the long-term political ramifications are positive and that means the market could be set for another boom.