Who’s afraid of cryptocurrency?

Since its inception, cryptocurrency has been regarded as technically fascinating but fundamentally unreliable. Those who invested £10 in Bitcoin eight years ago would have £1.6 million today — a fluctuation which, while mind-boggling, further undermines the notion that digitally created currency is a stable store of value. At first, it was dismissed as a toy for geeks. Then it was seen as a threat, used by criminals to buy drugs and guns. Some, like Lloyds Bank, have refused to carry out any cryptocurrency transactions on behalf of customers. But its popularity has kept growing and this week, it made a significant leap towards the mainstream.

Rather than ban Bitcoin, the New York Stock Exchange has said it is developing a trading platform which would allow investors to buy and hold virtual currencies far more easily. This brings these currencies out of the shadows. It is becoming clear that the image of cryptocurrency as a haven for criminals and fraudsters has been greatly exaggerated. Bitcoin proved to be no hiding place for Ross Ulbricht, the creator of the illicit drugs market Silk Road, who was jailed for life in 2015.

The technology such currencies are based on, blockchain, has allowed other Bitcoin epigones to be set up. In theory, Bitcoin poses a threat to the current world order: if governments lose their monopoly over the ability to print money, what then? In her book The Mandibles, our columnist Lionel Shriver imagined an American economy destroyed by cryptocurrency supplanting the dollar as the world’s reserve currency. A wicked fantasy, but many central bankers talk as if they believe it might come true.

Mark Carney, Governor of the Bank of England, has been particularly excitable on the topic. He has said the volatility of cryptocurrency last year was 25 times that of equities — something he sees as such a problem that it justifies regulation.