This article appeared in Times of Malta
Like many, I have watched wide-eyed as Bitcoin values have soared – another of the peculiar outcomes of the COVID-19 pandemic. Naturally, this has attracted many to start seeing so-called ‘cryptocurrencies’ as an investment that will generate outstanding returns in a generally low return environment. Some major financial institutions, never ones to miss out on any fad, have started offering cryptocurrencies as part of investment portfolios.
Yet, before diving in, it might be as well to understand what these offerings are and what they are not.
First of all, ‘cryptocurrencies’ are not currencies in any meaningful sense of the word. They are digital assets that we still don’t really understand. So, let’s call them what they are: cryptic digital assets – or cryptic assets for short.
What would it take to turn them into real currencies? Many things. But maybe the biggest would be if governments started accepting such cryptic assets in payment of taxes. That would create immediate and substantial demand and embed them as meaningful means of exchange. I don’t believe that any serious government will or should do such a stupid thing. Cryptic assets will not become currencies. Their role as a medium of exchange will remain marginal.
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