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The Central Bank of Singapore says Bitcoin and cryptocurrencies in general have the potential to create a new electronic standard for storing value as an alternative to gold. Central Bank of Singapore (MAS) chief economist Mansoor Mohi-uddin said that emerging digital assets must pass a few remaining tests to prove their longevity and reliability such as: a means of storing wealth.
Specifically, first, investors need trusted institutions to be able to hold digital currencies securely. Second, liquidity needs to be significantly improved to reduce volatility to a manageable level. Mr. Mohi-uddin also cites Bitcoin’s massive price movements over the past 12 months and the fact that it plummeted alongside traditional assets last March, as two signs that the virtual currency is yet to fall. must be a stable store of value.
“Bitcoin is very volatile as it has gone up over the past year from $4,000/BTC to over $40,000/BTC and then back to $30,000.Bitcoin is also correlated with stocks and other risky assets rather than trading. During a financial crisis, cryptocurrencies are more likely to be dumped by investors as happened at the beginning of the pandemic in March 2020. , Mr. Mohi-uddin analyzed.The MAS representative also pointed out that cryptocurrencies have the potential to have a real impact in replacing fiat currencies, but Bitcoin’s scarcity is a stark contrast in an era of rapid money printing and stimulus. current currency.
“Governments are very wary of any technology that has the potential to replace national currencies. This will reduce the ability of policymakers to print money during economic crises,” the representative said. emphasis area. Although bitcoin has similar properties to gold, it is scarce in mining and has the advantage of being easy to carry because it is in digital form. However, it cannot be completely replaced because gold is a physical form that can be secured, held and controlled without any high-tech intervention such as the internet, encryption,… While bitcoin is a form of asset in cyberspace, subject to many technical factors and risk of loss. Therefore, bitcoin or virtual currencies are only a storage option and cannot completely replace impostor role of gold in the future.
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