Could Crypto Speculation Kill Blockchain Innovation?

Crypto Assets

The development of cryptocurrency, and the blockchain technology that underpins these digital assets, has long been about innovation and experimentation. However, the increasing pressure that investors have placed on cryptocurrency as a speculative investment may be acting to kill the innovative nature of blockchain development, according to one financial expert.

Singapore Wants More Crypto Innovation

Meet Sponedu Mohanty. He’s the Monetary Authority of Singapore’s chief fintech advisor, and he thinks that speculative investing in digital currencies could possibly destroy cryptocurrency’s experimental value. A rare instance of a government official that has positive views of cryptocurrency, Mohanty spoke with CNBC recently about how speculators might be having a negative impact on cryptocurrency in general – with so much speculative activity contributing to the volatility of major cryptocurrencies like Bitcoin, the concerns Mohanty raises are quite timely.

The MAS, as a government agency, is also one of the few around the world that’s working on a completely legitimized blockchain project in an effort to digitize its fiat currency. The initiative, known as “Project Ubin,” has some serious implications for the future of blockchain technology and its acceptance by official authorities; while proponents of cryptocurrency’s decentralized, trustless nature where it’s hard for one single entity to exert unilateral control are less than thrilled with the prospect of having a central government holding the reins, explicit support on a national level for blockchain technologies will undoubtedly speed their adoption and incentivize innovation and experimentation.

Speculation Run Amok Could Be Bad News

But not, as Mohanty fears, if speculation run amok continues to throw monkey wrenches in the overall perception of cryptocurrency. Attempting to find a use case and experimenting in a technology and that Mohanty categorized as “fabulous” will be obviously difficult if speculation continues to drive impossibly volatile market conditions, the Singapore central bank executive warned.

All eyes are indeed trained on Singapore and the MAS blockchain project, with lending institutions like Credit Suisse, Citi, Merrill Lynch, and Bank of America all having skin in the game over the development of Project Ubin. Yet even as resources are spent in finding institutional fintech solutions that will satisfy international banks and central governments, the global environment continues to be hostile to blockchain development due to the negative impacts of speculation.

Other Attempts at Quashing Speculative Activity

An important case in point in how countries are looking to regulate or at least influence cryptocurrency include South Korea’s introduction of measures in January of 2018 that were designed to remove speculation when it came to crypto users living within its borders. The South Korean government moved to ban using anonymous bank accounts that had previously been used to trade in cryptocurrencies, instantly generating concerns that the country would go farther when government officials made suggestions that a complete cryptocurrency exchange ban was one of the plans under consideration.

Whether South Korea will indeed pull the trigger on a full ban or not is unclear at this time. What is apparent with increasing clarity, however, is that world governments are taking cryptocurrency and blockchain technology – and the implications that these technologies have for the fintech sector – much more seriously than ever before. Any move toward limiting the availability of exchanges to cryptocurrency investors will, of course, reduce the impact of speculation. However, by the same token, reducing access to exchanges will severely limit the ability of individuals that are interested in learning more about the technology to know how cryptocurrencies work, which in turn could limit the spread of blockchain as a whole.

Guest Post submitted by Catherine Tims, freelance writer for