Good morning! It's Paul here.

I have to complete this report much earlier than usual today, because I'm heading up to London for a lunchtime meeting with the Directors of Vianet (LON:VNET)

Please note that I finished yesterday's report in the evening, so it now covers: Vianet, FreeAgent, Character, Fulcrum Utility Services, and PCI-PAL. Here is the link to yesterday's completed report.


Firstly, as it's a quiet day for interesting news, I have to comment on Bitcoin - surely the hottest topic in the financial world at the moment. People ask me if it's a currency, or a speculative bubble? Actually, I think it's both!

Currency? - as a friend pointed out to me recently, literally anything can become a currency if enough people decide to use it as a currency. If enough of us decide to use seashells as a currency, then seashells become a currency!

Bitcoin does seem to be gaining traction as an acceptable currency, although it's still very much on the margins as a niche thing. Also, I think a lot of the press articles about so and so accepting bitcoin, look like publicity stunts.

Why would anyone use Bitcoin? Possibly for experimental reasons, but mainly I think it seems to be a mechanism to by-pass the conventional financial system. Hence it is apparently the currency of choice for criminals, drug dealers, etc, seeking to launder their money. It may be the case that many, even most bitcoin transactions are legitimate. However, just using common sense suggests that a main motivating factor to use bitcoin is to bypass laws & regulations. Apparently it's popular in China as a way of hiving off money overseas, thus avoiding exchange controls.

This to me seems the obvious catalyst for bitcoin's eventual, inevitable collapse - that Governments are likely to ban, or regulate its use. It seems almost ridiculous to expect Governments to sit back and do nothing, whilst their control over the financial system slips away.

Only last week the UK Government announced that it was intending to regulate use of bitcoin. The UK might be insignificant overall to bitcoin, but it can only be a matter of time before big Asian economies like China and Japan also introduce regulation or outright bans on the use of bitcoin. The Chinese shut down a bitcoin…

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