Bitcoin may be plunging, but Britain could still be a blockchain leader

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A clos­er look at Owen’s scheme sug­gests it sim­ply won’t allow the NFTs to be sold for a price below the ini­tial sale price. But not allow­ing peo­ple to sell at a loss is not the same thing as guar­an­tee­ing an asset can’t fall in val­ue. In fact, such an arrange­ment could exac­er­bate the downside. 

If you buy an asset for, say, £10,000 and its val­ue starts to fall, you may want to cut your loss­es and sell at £9,000. If you can’t, the val­ue of your invest­ment may fall to pre­cise­ly £0.

When the author­i­ties in emerg­ing mar­kets some­times sus­pend trad­ing on their stock exchange in peri­ods of extreme mar­ket volatil­i­ty they are habit­u­al­ly accused of lock­ing the doors on a burn­ing build­ing and trap­ping investors inside. 

Owen is ush­er­ing investors into a shiny new con­struc­tion and mak­ing a virtue of the fact its doors only open from the outside.

And he is doing so while the rest of the neigh­bour­hood goes up in flames. Last week, Ter­raUSD, a so-called “algo­rith­mic sta­ble­coin” col­lapsed, prompt­ing a multi­bil­lion-dol­lar sell-off across cryp­to mar­kets. Sta­ble­coins are intend­ed to main­tain a fixed val­ue, which is typ­i­cal­ly $1 a coin. 

Some are backed by gen­uine, hon­est-to-good­ness assets. But oth­ers are “algo­rith­mic”, which means their price is main­tained through a promise to either cre­ate more of the cur­ren­cy or with­draw it in order to match sup­ply and demand. How­ev­er, this approach can – and last week did – lead to a “death spi­ral” if investors lose confidence.

“The fail­ure of Terra’s peg has sent shocks through the decen­tralised finance sec­tor,” warned Fitch Rat­ings with impres­sive under­state­ment. Bit­coin is also hav­ing anoth­er of its peri­od­ic nightmares. 

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