Cryptocurrencies are only as good as their underlying economic performance: MTI – Business News


  • Developing countries should ask “Why? “Before” How? “

While welcoming Sri Lanka’s decision to assess the feasibility of crypto currencies, MTI Consulting warned that developing countries should ask “Why? Before “How?”.

“Cryptocurrencies are essentially efficient transaction tools. The focus should be on creating underlying economic value – through responsible production and consumption.

Most cryptocurrencies are decentralized networks based on blockchain technology and not issued by a centralized sovereign authority.

Currently, the motivation for adoption is based on speculative investment, less on the possibility of widespread financial inclusion. Here is the pitfall to be avoided, while pursuing the benefits offered by cryptocurrencies, ”said Hilmy Cader, CEO of MTI Consulting.

MTI highlights the advantages of cryptocurrencies as high transaction speed and low transaction costs due to disintermediation. It is secured by cryptography and blockchain technology, which makes it difficult to counterfeit.

However, it can also provide a “safe haven” for illegal activities such as money laundering, tax evasion and terrorist financing. It is vulnerable to cyber threats and manipulation by “whales”, ie those who hold large amounts with the potential to manipulate currency valuation.

Thanks to their demonetization campaign, India was able to digitally transform its banking infrastructure. India created the National Payments Corporation of India (NPCI), a consortium of public and private banks, which created a complex network called the Unified Payments Interface (UPI).

This enables real-time peer-to-peer transactions between any bank account in the country. India also launched “RuPay”, a financial transaction system designed to reduce reliance on Visa and MasterCard.

All of these measures have improved financial inclusion, the speed of transactions and reduced transaction costs. As a result, the Indian government is in no rush to embrace cryptocurrencies nationally, despite growing adoption among retail investors.

El Salvador’s recent attempt to recognize bitcoin as legal tender provides developing countries with an interesting case study, but it is too small and too short a sample to be used as a normative model. Despite the 11% drop in value after adoption, after one month 46% of the population own a bitcoin wallet while only 29% have traditional bank accounts. Many South American countries like Panama, Paraguay, Argentina and Brazil are evaluating the feasibility, but it is not known whether this will be a sovereign offer or the creation of an enabling environment. to established cryptocurrencies such as Bitcoin. Large economies like China, Russia, and Turkey are experimenting with central bank digital currencies (CBDCs) – because they offer better stability than other cryptocurrencies and greater flexibility than fiat currencies. Interestingly, what is driving Iran’s adoption of cryptocurrency is the US sanctions, resulting in limited access to international financial markets.

The leading players and shakers in the crypto world are:
-Starbucks, Yum Brands (owner of KFC, Pizza Hut, etc.), Restaurant Brands International (owner of Burger King, Popeyes, etc.), Coca Cola, Pay Pal, E-Bay, Microsoft, Tesla – have started to accept Bitcoin as an official payment option
– The “Big Boys” of the bank started to invest, in total approx. $ 2.5 billion. The main investors are: Standard Chartered (360 million USD), BNY Mellon (321 million USD), Citi Bank (279 million USD), UBS (266 million USD), BNP Paribas (236 million USD), Morgan Stanley (234 million USD) ), JP Morgan Chase ($ 206 million), Goldman Sachs ($ 204 million), MUFG ($ 185 million), ING ($ 170 million)
– The current crypto market cap is US $ 2.3 trillion (October 9) – a 17-fold growth in 12 months.
-Bitcoin contributes 43% of the market capitalization, while in 2013 Bitcoin made up 94%.

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