Britain’s Leave campaigners may have accomplished what Napoleon, Kaiser Wilhelm II, Adolph Hitler and the Soviet Union could not. The Brexit promoters may have set in motion a series of events that could destroy one of history’s great currencies; the Pound Sterling, and demolish what is left of the British Empire.
If all that was not enough they might have launched a paradigm shift which transform bitcoin from a near curiosity into a major currency. Disturbingly the signs to that cataclysm were there even before the Brexit vote.
The price of bitcoin skyrocketed in the week before the vote according to our friends at Coindesk. A bitcoin hit a high of $768.24 on Thursday June 16; one week before the Brexit vote, then plummeted to $602.89 on Wednesday June 22; the day before the leave election, and bounced back up to $665.16 on the day after – June 24.
This indicates that there were a lot of speculators out there who expected something big to happen on June 23. A lot of that activity appeared to be coming from the United Kingdom, where average Brits were preparing for the worst.
Britons have Lost Faith in the Pound
Coinbase reported that new signups for its Wallets from the UK increased by 55%, and bitcoin purchases in the country increased by 350%. On the day of the plebiscite – the percentage of new bitcoin wallet signups in Britain increased by 86%.
That indicates a large number of Her Majesty’s subjects no longer have faith in the pound sterling. They were looking for an alternative, perhaps because of the talk they were hearing down at the local pub.
Obviously some of this was driven by hysteria, and a desire to speculate but it signals widespread skepticism in Her Majesty’s government, the pound, the economy and Brexit. Disturbingly, events have shown us that the crowds who rushed to sign up for Bitcoin might have been wiser than the nation’s political and economic leaders.
Is it the End of the United Kingdom?
The success of Brexit has unleashed chaos and raised the possibility of complete political disintegration of the United Kingdom. Political forces that might rip Great Britain apart were unleashed by the vote.
The day after the vote Scotland’s head of government; First Minister Nicola Sturgeon, appeared on television and announced her intention to seek a referendum for Scottish Independence. More tellingly, the website of Sturgeon’s Scottish Nationalist Party; or SNP, contains statements that indicate she and her followers do fell Brexit is binding on Scotland.
The SNP website contains these statements:
“Scottish Government Ministers are talking to Scotland’s businesses to reassure them that as of now Scotland remains firmly in the EU – trade and business should continue as normal. Scotland remains a stable and attractive place for business and investment.”
“We are reassuring EU citizens living in Scotland that they are welcome here.”
“If it becomes clear that independence is the best way to secure Scotland’s place in the EU then it will be on the table and will be a decision for the people of Scotland to take.”
“The necessary legislation for a second independence referendum is being prepared to ensure that it is a deliverable option.”
The SNP is simply responding to the wishes of Scottish voters, 62% of whom voted no on Brexit. Leaving the EU might violate Britain’s unwritten constitution, which guarantees co-equality between the four nations of the United Kingdom; Wales, England, Northern Ireland and Scotland. Since 55.7% of Northern Irish also voted against Brexit it might not be constitutional.
This means Scotland; and perhaps Northern Ireland, have the legal right to simply walk out of the UK if they wish. It opens the door for a legal and political mess.
The Pound is History
If that comes to pass the pound is history, predictions that the pound might reach parity with the US dollar are optimistic. The pound was trading at $1.34 on June 29, 2016, at parity it would be worth $1.
The pound trading at prices of below $1 or €1 is a real possibility. If that were to occur, hyperinflation or total economic collapse in the UK is almost certain.
The cause of the pound’s total devaluation would the political uncertainty. A major problem would be the British government’s reaction to Scotland’s exit. Would Prime Minister Boris Johnson be willing to deploy the army; a large percentage of whom are Scottish against the Scotts? What happens if the Scotts seize Britain’s nuclear weapons which are deployed on submarines based at Helensburgh, Scotland?
Nor is it just Scotland, London’s Mayor Sadiq Khan made this statement on June 28, 2016:
“Londoners — who voted for a different path than the rest of England — need more self-determination. We need to control our own destiny. And we need to make our own decisions too. Now, as much as I might like the idea of a London city state, I’m not seriously talking about independence today. I’m not planning to blockade the M25. But on behalf of all Londoners, I am demanding more autonomy for the capital — right now.
More autonomy in order to protect London’s economy from the uncertainty ahead. More autonomy to protect the businesses from around the world who trade here; and more autonomy to protect our jobs, wealth and prosperity. London needs to be able to determine its own future from now on.”
Khan was responding to a Change.org petition to “Declare London independent from the UK and apply to join the EU;” launched by a man named James O’Malley. The petition had received 177,448 signatures as of June 29, 2016.
Such calls for independence will only grow if the pound collapses leaving the United Kingdom without a sound currency. Under such conditions the allure of the Euro will be irresistible.
Will Bitcoin Replace the Pound?
The value of Bitcoin will go through the roof as people of all classes in the United Kingdom look for an exit for their money. One has to wonder how the British government would react, would it shut down the internet to keep all the money from leaving the country.
Interestingly enough Plutus; a London startup ,announced plans for contactless card terminals that would allow brick and mortar merchants to accept Bitcoin and another cryptocurrency called Etherum on June 29, 2016, Cryptocoin News reported. The technology is not available yet, but Plutus also plans an Apple Pay style payment app.
A video showed a customer using Plutus at Britain’s largest supermarket; Tesco (OTC: TSCDF), to pay for her groceries. That might indicates big companies are thinking about how to stay in business after Brexit. They too might dump the pound, which would be a paradigm shift of seismic proportions.
It looks as if Brexit might be the event that transforms Bitcoin from a niche product into a widely used currency. One has to wonder how nationalists like Nigel Farage will react to that.