…experts say why you should invest now
While the tangible benefits of cryptocurrency are currently limited, the advantages of investing in digital coins are expected to skyrocket in the coming years.
One of the widely known and largely used crypto currencies is the Bitcoin, the first decentralised peer-to-peer payment network that is powered by its users with no central authority or middlemen.
Gabriel Abed, the founder of Bitt, the fintech firm behind the new Caribbean cryptocurrency; and Robert Williams, the Associate Information Officer of the United Nations Economic Commission for Latin America and the Caribbean, are encouraging persons to educate themselves about the revolutionary cryptocurrency movement, and decide whether they are prepared to capitalise on this dynamic shift in the worldwide digital landscape.
Value
Abed explained that cryptocurrencies can be used for cost savings in value transfer, to access markets otherwise not accessible using other forms of payment, or for trading purposes in order to earn profits.
“You can use them to buy digital assets and stocks in new generation companies,” he explained to the <<Guyana Times>>.
Williams added that this is the creation of a new channel for payments infrastructure, and there are lots of values to be had in giving the existing channels some competition.
“One hopes that the added competition from digital currencies will inspire banks to improve their services, increase their level of efficiency, and pass the savings on to consumers,” he stated.
Risks
However, like with any investment, there are associated risks in the use of cryptocurrencies, but Abed has said he cannot list a single risk with Guyanese getting involved with Bitcoin, other than lack of education.
“Education and awareness are paramount, just like the early Internet age of awareness was crucial,” he stated.
Abed said investing in cryptocurrency is attractive, because it provides an alternative value transfer system and store of wealth.
“The idea behind the main cryptocurrency at reference, bitcoin, is deflationary in the sense that only 21,000,000 bitcoins will ever exist. This form of limitation does make for a great ingredient in pricing speculation, especially in the case of increased utility and user growth, which bitcoin is facing,” he said.
The downside, however, is that, due to their nature of being a global market asset and because they are 24/7 global market trading and manipulation-prone, the prices of bitcoins swing violently. “However, average cost buying is a great way of buying bitcoin monthly — a little bit at a time, regardless of the price. If the principles of deflationary systems hold true and bitcoins (or the other crypto) hold utility, then the price should rise over time,” Abed stated.
The expert advises that persons should invest only what they can afford to lose; and they are investing at their own risk, after they would have educated themselves on the topic.
UNCLAC Associate Information Officer Robert Williams has also cautioned potential investors to weigh the pros and cons before making a big leap into the cryptocurrency market.
“Ten years from now, it is likely that what we see now as innovative payment systems would have become integrated into the global financial landscape. It’s important to ensure that, when this happens, Guyanese businesses will not be on the outside looking in, but rather are able to use crypto currency as a tool that can facilitate their integration with international value chains,” he expressed.
Regulatory sandboxes
Abed and Williams acknowledge that digital coins put governments in a difficult position, but they are of the view that embracing this technological revolution can transform the business landscape of any nation.
Abed said governments should see bitcoin as technology for many different uses in their organisation. Real estate land titles, birth certificates and passports are just a few areas of business that can be revolutionised with ‘blockchain’ technology.
A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing, as ‘completed’ blocks are added to it with a new set of recordings.
Williams recommended that governments should follow the lead of the United Kingdom in establishing “regulatory sandboxes,” which give innovators in this space the latitude they need to experiment with new products under a time-limited regime of relatively lax regulation, while still assuring that these companies maintain basic standards of conduct.
A regulatory sandbox is a ‘safe space’ wherein businesses can test innovative products, services, business models and delivery mechanisms.
“In the long term, a legal framework will be necessary to assure consumer protection, appropriate taxation, and compliance with existing laws. But I would advise against establishing one prematurely,” he stated.
Williams reminded that this technology is still in a highly experimental stage, and it’s not clear what the end result is going to look like.
The Guyana Entrepreneurship Network (GEN) hosted, on April 6, the country’s first forum on digital currency. (Devina Samaroo)
