Although the UK parliament still seems to be in disarray regarding Brexit, when the UK does finally leave the European Union (EU) it could actually mean good news for cryptocurrencies. Changes to the regulation around how people can buy and sell Bitcoin and other cryptocurrencies are likely to be more progressive, according to a survey of analysts conducted by Cindicator. In fact, 62% said they think Brexit might increase cryptocurrency values, and 74% said they will consider adding cryptocurrency to their own portfolio of investments, while 44% believe the UK will take a more progressive view of the crypto market post-Brexit.
March saw the UK fail to leave the EU on the anticipated date of March 29th, as many waited with bated breath to see whether there would be a no-deal Brexit. Had this happened, it would have meant an end to trade between the UK and the EU with no alternatives in place. Markets responded to the news of a likely no deal Brexit, with the pound and the euro both looking shaky and unpredictable.
Bitcoin by contrast has enjoyed a 30% increase in its value recently, with some analysts citing Bitcoin as a viable alternative investment to fiat currencies like the pound or euro.
As a no-deal Brexit was taken off the table however, and a new date of October 31st agreed, Bitcoin took a slight drop in value of 5%, while the euro and pound became relatively more stable in response to the news. It is hoped this minor drop may be a small blip in response to Brexit, in an otherwise bullish market for cryptocurrencies, as more industries start to see the potential in cryptocurrency and blockchain technology.
While the impact of Brexit's uncertainty on the pound has been well documented in the press, the impact on the euro has been less apparent. However, Germany's economy is highly dependent on trade from the UK, and if Brexit disrupts this future relationship the value of the euro could also fall.
There is still a possibility that the UK will not end up leaving the EU, however it is looking unlikely that the British Parliament would go against what the people voted for in 2016, despite the damage it is already doing to the UK economy. Since the announcement of the referendum result, the UK economy has lost £800m a week ($1.045m), the pound has dropped 5% against the US Dollar, and 10% against the euro, according to the Bank of England. By contrast analysts believe that the Bitcoin by contrast is holding value hovering at more than $4,000, according to Market Watch, due to the ongoing Brexit uncertainty.
It seems Brexit is therefore bad news for fiat and good news for cryptocurrencies.
While both the pound and the euro take a heavy hit due to ongoing Brexit uncertainty, some analysts, such as Futurologist Thomas Frey, are claiming that cryptocurrency could replace these fiat currencies. These analysts reason that cryptocurrency could be adopted worldwide, and this could help countries with financial problems and stabilize their economies.
"Cryptocurrencies are going to displace roughly 25% of national currencies by 2030," predicted Frey, who is due to speak to the US Federal Reserve on the subject later this year.
It is an interesting perspective, and whether it is an accurate prediction of the future for world economies or not remains to be seen, but either way Bitcoin and other cryptocurrencies look set to remain an important piece of the economic puzzle in the future, as big name brands such as Microsoft accept Bitcoin payments, and other industry giants such as Nike embrace the potential of blockchain technology.