JACKSON HEWETT: Bitcoin is off the regulatory leash and soaring toward the magic $US100,000 mark

The Sohn Hearts and Minds conference is an annual shindig where some of the cleverest stockpickers pitch a compelling investing idea, with proceeds going to medical research. It took place in Adelaide on Friday.

Last year the best pick was a cracker. Aussie stock Telix Pharmaceutical rose by 150 per cent in a year. There was daylight between that and the next best pick.

This year, Bitcoin, which is up by 134 per cent in a year and by 40 per cent this month was the headline act.

The US election was at times called the crypto referendum, as it was backed by both Kamala Harris and Donald Trump, both trying to court the youth vote.

Those voters certainly got what they wanted in The Donald. Trump has his own cryptocurrency — TrumpCoin — and tech bro in chief Elon Musk has named his Department of Government Efficiency after his favoured cryptocurrency (DOGE ), which was founded as a piss-take and features the image of a Japanese dog.

Dogecoin is up by 230 per cent in the past 30 days.

US Bitcoin aficionado Mike Novogratz was the opening speaker at the conference. Novogratz’s net worth jumped almost $1 billion in a day following the election and the famed investor believes Bitcoin will soon hit $US100,000 ($A155,000) as Trump’s pro-crypto posse, including Musk and VP JD Vance let off the shackles of government regulation.

Cryptocurrencies will no longer be tied down by ‘regulatory purgatory’ he told the gathering, describing Bitcoin as the gateway drug that drives consumers into the space.

“(Bitcoin) is gonna be the story that you hear more than the rest of the digital assets for the next six months.,” he said.

One of the ideas that has been floated around the Bitcoin is that it might become part of a US strategic reserve. A bill currently before Congress, which is highly unlikely to get through, would require the US government to buy 1 million bitcoin.

“If we get the Bitcoin Reserve, I think Bitcoin goes to $US500,000,” Novogratz told Bloomberg. For the record, he thinks it is a bad idea.

So do the nations’ regulators. While the stockpickers were pitching hot stock in Adelaide, a much more sober affair was taking place at the Australian Securties and Investment Conference in Sydney.

Reserve Bank Governor Michele Bullock rubbished the cryptocurrency. “Don’t call it an alternative currency,” she admonished, admitting she doesn’t “get it” as an asset class.

But the Reserve Bank isn’t sitting on its heels.

RBA Assistant Governor Dr Brad Jones sees huge value in the blockchain technology underlying Bitcoin and think that it can save the economy billions in transaction costs, especially when it comes to international trade.

They see a world where the clunky system of trade — one where payments are on one platform and contracts for sale on another — are transacted instantaneously, freeing up capital and reducing risk.

Jones pictures a world where the benefits of trading on blockchain platforms becomes a core part of global trade, facilitating many billions of dollars of transactions.

Billions of dollars of transactions taking place outside of regulatory oversight is not something he is keen on. That’s why the RBA and other central banks are working on projects to create their own digital currencies, typically pegged 1:1 to the national currency, ensuring its value remains stable.

“If these markets do fulfill their potential and become very, very large, there’s a core principle which says that wherever possible, settlement in should occur in central bank money, because it is the ultimate safe asset,” Jones says.

That’s why regulators here think the buzz around crypto is a ‘sideshow’ to the main game. Bitcoin, they say, offered an early demonstration of the power of the Blockchain but will be eclipsed by the sheer volume of transactions that will be managed by mainstream financial players like big banks and fintechs using domestic currencies.

“You only need Bitcoin if you’re evading money laundering laws or engaging in criminal activity. It has no use case, except it’s a speculative asset,” says Ross Buckley, an expert in Fintech at UNSW, who sits on the Reserve Bank’s Payments System Board.

The technology will, in my view, reshape the economy over the next 20 years.

“Digital tokens convey all sorts of information, interact with smart contracts, allow all sorts of things we’ve never done before.”

That’s if the Australian government get off its heels, according to John O’Loghlen, the Asia Pacific managing director of largest listed crypto trading platform, Coinbase.

Coinbase was one of the larger donors in the US election and their campaign “I Stand With Crypto” purportedly mobilised voters to elect 280 pro-crypto candidates.

“We believe there’s been a kind of unhelpful stasis around the development of the policy (in Australia),” O’Loghlen says. “You need those policy makers in the right positions to understand the technology, understand the opportunities. We are seeing that bear out in the US, and we hope that that bears out in Australia as well.”

Other jurisdictions are far more advanced in the space including London and Singapore but perhaps the most important player is China.

As the world stares at trade wars and geopolitical conflict, the core currency underpinning global trade — the US dollar — is coming under question.

Nations like China and Russia have been buying up gold, rather than hold US dollar reserves, and the so-called BRICs (Brazil, Russia, India, China) coalition designed to challenge US dominanc is expanding.

No-one expects them to create their own currency but China does have a powerful tool in its arsenal in an increasingly digitised world.

According to Buckley, China is ten years ahead in digital central bank currencies, and has the economic power to force trading partners to use it.

“The obvious thing for China to do at some point is to release its central bank digital currency for offshore use and to mandate it to buy Chinese exports,” Buckley says.

“America gets incredible advantages from minting a global reserve currency: they want some of those advantages. So it’s really important the RBA and other and the government are working so hard on this.”