- Saudi Arabian expert called Bitcoin a first-class speculation tool.
- The expert said cryptocurrencies could have a place if the prices are determined by the central banks.
The leading digital currency, Bitcoin (BTC), faced a lot of objection during its early stage of development. However, the cryptocurrency has managed to break records with its parabolic rise in value, debunking several critics’ sentiments that the technology is bound to fail. Despite the fact that big-name companies are starting to hold the cryptocurrency as a reserve asset, some people still think the cryptocurrency isn’t worth investing in.
Saudi Arabian expert says Bitcoin is a high-risk asset
While speaking with the local news outlet, Arab News, the Saudi Arabian financial expert and former banker, Fadhel Al-Buainain, dismissed the leading cryptocurrency as having “significant risks”. He noted that the cryptocurrency is a “first-class speculation tool” as it doesn’t have any backing, not from economic superpowers nor cash reserves. This is unlike fiat currencies such as the US dollar, Euro, etc., whose valuation mechanism is based on the government.
As Al-Buainain narrated, during the early times of Bitcoin, it was basically used to transfer money denominated in the USD whilst avoiding centralized financial institutions. However, the narrative has chcanged as the cryptocurrency is now seen as an independent digital currency that derives its value from its supply and demand. The Saudi Arabia expert further mentioned that the cryptocurrency is still not approved by many banks.
Bitcoin value should be determined by central banks
“The risks involved with Bitcoin are major and significant,” Al-Buainain said. “The first risk is that nobody knows how it started and where it gets its strength. Another risk is that it is not tied to any central bank or a financial institution that guarantees it”.
Conclusively, Al-Buainain is of the view that digital currencies like Bitcoin are impractical to use since their value isn’t determined by the government or central banks. Hence, the market can easily get manipulated in this form. As far as the expert is concerned, cryptocurrencies will only have a place if their value can be determined by the authorities.