Bitcoin and the blockchain markets at large have the ability to establish a modern electronic value storage standard that could replace gold, the Bank of Singapore says.
Mansoor Mohi-uddin, chief economist of the bank, told The National News that emerging digital assets must survive a range of remaining tests to show their durability and efficiency as a way of stockpiling capital.
“First, investors need trustworthy institutions to be able to hold digital currencies securely. Second, liquidity needs to improve significantly to reduce volatility to manageable levels.”
In a research note, Mohi-uddin wrote that the dwindling supply of bitcoin meant investors were gradually looking at it to improve their portfolios, while there are still a range of regulatory and reputational challenges.
He denies that bitcoins have any real shot at replacing the fiat currency, but claims that in the present age of accelerated money printing and fiscal easing, the volatility of Bitcoin serves as a strong contrast.
“Governments are very wary of any technology that could potentially displace national currencies. This would reduce the ability of policymakers to print money during economic crises.”
An example of Bitcon’s growing dominance is in Africa. The continent’s dependence on cryptocurrency has increased significantly as economies in the continent feel the effects of covid. Before the 2016 recession, Nigeria’s economy was growing at 6.3% . Right before COVID struck, growth had slowed down to 2.2%. In the same period, inflation and underemployment increased, casting a shadow over prospects of significant industry growth in 2020. Development challenges continue to cripple the nation.
Africans have looked to the cryptocurrency as a need rather than a want. It is not just a shiny new technology. For many Africans, it is a lifeline to financial independence in regions where safety nets are almost non-existent.