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The need for a balanced point of view on cryptocurrency
Material posted: Publication date: 31-10-2017
Several years ago the author wrote the material, which drew attention to those aspects of Bitcoin that is not very customary to light up. In this article we are talking about the challenges that continue to confront the enthusiasts who believe that cryptocurrencies will replace the traditional financial system.

The author acknowledges that Bitcoin tool is interesting, but expressed the view that it is not even close to suitable for the role of the Savior of the international financial system.

A three-year monitoring the growth of Bitcoin, a key concept in the world of cryptocurrencies led to the fact that the author only further strengthened the opinion that all of these points are true.

— Various scenarios of altcoins, which are today much talk, not enough understanding of the modern financial system.

In a recent interview with the head of the International monetary Fund was announced in the case of the use of cryptocurrency as a means of enabling women in developed countries use mobile phones for conducting Commerce. But this is already happening today, without Bitcoin or cryptocurrency.

For example, in the Kenya market for 10 years, there is a solution called M-Pesa. During this time, 26 million Kenyans and visitors have sent and received funds for a total amount of 184 billion Kenyan shillings. As a result, government officials and regulators report that the country is actually "working on M-Pesa". We are talking about movement within the country 1.8 billion USD and all this with a conventional keypad of mobile phones.

The original scenario for the use of M-Pesa was aimed at the digitization of bills which once passed in the village physically in paper bags bus. M-Pesa would never have soared if not for the ability to convert digital money into the currency that their owners could spend on the local market. The launch of the network of agents providing services to convert digital money into cash, which could pay in stores, led to the rapid popularization of M-Pesa. And those who say that women in the developing countries of Africa win by getting money in bitcoin, just can't understand what kind of problems does this approach. It is not only volatility that accompanies cryptocurrencies, but in the need to find a place where they could exchange it for currency that can take the seller at their place.

Africa is not the only emerging market in which attempts of digitalization of money and operations with them without any use of cryptocurrency. China is actually digitized your money with the help of Alipay, last month I mentioned in the news loud the announcement of the closure of cryptocurrency exchanges.

India uses QR codes, coupled with existing financial channels and their Fiat currency in order to after the earlier demonetization of the people of the country to send each other digital payments. Western Union works in the sphere of money transfers around the world, including in developing countries, and doing it for the past 160 years without any cryptocurrency. In the same field of work and MoneyGram, Xoom and PayPal.

Cryptocurrencies have been the object of careful review by the banks and regulators around the world, including in some of the countries in which they seemingly could be useful. In China, Vietnam and Bangladesh cryptocurrency is already declared illegal or imposed on them all sorts of prohibitions. Singapore Bank closes accounts of persons who do business in bitcoin, and reportedly the head of the Singapore Association of the cryptocurrency and the blockchain industry, he has informationthat the closure will also affect companies operating under the auspices of the FINTECH hubs.

Not to mention the ICO — was born thanks to the cryptanalyst a tool that allows to create analogues of the financial instruments in a grey legislative area governing the securities.

Using the ICO wishes to obtain financing innovator gets the opportunity to release a cryptocurrency, so-called token in exchange for his promise that eventually the token will grow in value.

The volume of funds invested in various ICO is amazing. According to Pitchbook, only this year with ICO was attracted 1.3 billion dollars. During the same period of time functioning on the basis of cryptocurrency startups received 634 million dollars of venture capital investments. Why venture capital companies invest more when they can just wait until you find out what the ICO will lead to the creation of truly sustainable companies?

ICO investors do not receive any equity interest in the company, or even any metrics of return on their investment, but said one investor, the risk of losing all of your invested capital, however, remains no less real than usual. However, there are those who do have it on hand. For example, the hedge funds, which, apparently, use the ICO to increase their wealth. They buy tokens at a discounted price and resell almost immediately, receiving in return a large profit. Their actions, as some say, just give the inexperienced individual investor false confidence in the value of the asset.

— Cryptocurrency and innovation in the field of financial services are often seen as going hand in hand, inseparable concepts

Innovation Satoshi Nakamoto was to create an open Internet a distributed registry, issued in the form of Bitcoin. The reputation of Bitcoin has led to the creation of alternative schemes of implementing distributed registries operating on the basis of new cryptocurrencies such as Ethereum or XRP.

As a result, it was assumed that innovation in the field of global financial services, including such things as transfers in real time is only possible if you add in the technological mix of the cryptocurrency.

While bitcoin and the ICO seized the headlines, the light already there are innovationstaking the best from the technologies of distributed, managed, secure and private registries. This concept allows you to translate in the digital form any assets, including shares, points loyalty programs and contracts, which are issued by regulated financial organizations and governments, as well as move them and make transfers in real time across the world. The process occurs within the framework of existing secure and regulated environments, based on the Fiat currencies of all countries, through systems which are funds on the way to the end point.

And if this sounds like something similar to the international card networks, the way it should be.


Tags: finances

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