An analyst at Australia’s largest listed fund manager, Magellan Asset Management, has broken ranks with his traditional finance peers and publicly proclaimed a blockchain-based digital currency could revolutionise finance.
Magellan Asset Management Investment Specialist, Michael Collins, today published an article on Australian investment advice platform, Livewire Markets, in which he listed four reasons why he believes a blockchain-based currency could one day earn reserve status.
“A cyberspace currency based on blockchain technology, issued by a consumer platform such as Amazon, Apple or Facebook (or China’s Alibaba or Tencent, for that matter) could revolutionise finance for four reasons,” wrote Collins.
His four reasons:
- The biggest consumer platforms have billions of users around the world who are likely to use the digital money.
- Virtual currencies could introduce financial services to the 1.7 billion people in emerging markets who Facebook estimates lack access to financial services.
- Money transfers within a secure private network could be close to costless, instantaneous, and hassle-free. Digital currencies would thus take business away from the existing traditional money-transfer systems run by commercial and central banks under country-based regulatory systems.
- Digital currencies can be designed to conquer the notion that coded software has no ‘intrinsic value’.
While he believes the companies listed above have the technological capabilities to create a mainstream currency, Collins says policy-makers are proving to be a major hurdle.
“The latent public demand is there. The business opportunity is immense. The most successful currency issued by a digital platform could easily merit reserve status.
“But regulatory concerns will need to be allayed first and there is no guarantee they will be any time soon.”
Facebook Libra’s ‘telling advantage’
While it’s rare for an employee of a traditional and established financial firm such as Megallan to endorse cryptocurrency, the analyst didn’t go as far as to endorse Bitcoin.
In fact, Collins says Facebook’s Libra has a ‘telling advantage’ over Bitcoin.
“The telling advantage of Facebook’s Libra over Bitcoin is that Libra will be fully backed by safe assets denominated in reputable currencies,” he wrote.
Magellan Financial Group is a top 100 ASX-listed company, with a market cap of around AU$9.3 billion.