Editor's note: The original title was "Chairman of the Brazilian Banking Federation: Cryptocurrency Fails as a Currency"
The head of the Brazilian banking industry believes that crypto as a currency is a failure. But in neighboring Venezuela, it has "changed the fate of the entire country."
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Murilo Portugal, chairman of the Brazilian Banking Federation, believes that cryptocurrencies are not real currencies at all.
Portugal said this while the nonprofit think tank Fernando Henrique Cardoso Foundation was debating "the impact of the digital revolution on the financial system." The debate was about topics such as the impact of emerging technologies on the financial services industry, including blockchain, cryptocurrency, big data, artificial intelligence, and fintech.
Portugal argues that "cryptocurrencies do not perform any of the classic functions of currency" and argues that cryptocurrencies are not a unit of account, a means of exchange, or a means of value storage.
They are actually called coins, but they are not coins, which is why it is a cryptocurrency. They do not perform any of the classic functions of money, that is, as a unit of account, allowing people to use it to price goods. It is not a means of payment, nor is it a means of storing value, because it is highly volatile. "
Portugal is a respected figure in the financial industry. He holds a degree in economic development from the University of Cambridge and has served as executive director of the World Bank and International Monetary Fund (IMF).
He went on to put forward the theory that money and information are becoming one, and predict that data and information will eventually be regulated in the same way as money. "I think we've seen this happen.
Bitcoin is a "tool currency" in Venezuela
A report released by the Open Money Initiative on March 24 showed that even in Venezuela, a neighboring country where hyperinflation is rampant, Bitcoin has not been used as a traditional value storage method.
Data scientist Matt Ahlborg's report examines the impact of a multi-day power outage in Venezuela and its relationship with local bitcoin trading volumes, as well as transactions between bitcoin and other South American currencies.
It determined that bitcoin was being used as an “instrument currency” to transfer value from Venezuela, instead of the regular currency, and that the sender held bitcoin only when necessary and converted it to US dollars or stable currency as soon as possible. The report states:
"Bitcoin is not an end point for a store of value, but a channel for access to the US dollar, the Colombian peso, the renminbi, and various stable currencies."
However, Ahlborg concluded that this is a very valuable case of Bitcoin application:
"In the past few years, it may not be unreasonable that Bitcoin may have facilitated the transfer of billions of dollars of unexamined value between Venezuela and other countries. If we think this is a real existence Possibility, then Bitcoin has played a role in changing the fate of the entire country. "
Is Bitcoin a store of value or a form of currency?
The ability of Bitcoin as a currency has caused heated debate. Some people believe that Bitcoin is "digital gold," including the Grayscale Bitcoin Trust, which launched a public campaign around the concept. In a blog post published in February this year, the American exchange Coinbase believed that "Bitcoin is a value storage method that competes with gold in the digital age."
Cointelegraph's Antonio Madera explores this issue in an article in late February. He spoke with Antoni Trenchev, managing partner of cryptocurrency banking application Nexo, who saw Bitcoin as a store of value:
"The early saying was that Bitcoin will become a revolutionary currency and p2p payment system. I don't think this has been achieved in any way. Bitcoin has the function of a currency, but it is more used as a value store and value transfer , Especially in terms of large value transfers. "
Madeira writes that Bitcoin exhibits five of the six characteristics of currency-durability, portability, separability, uniformity, and limited supply. However, he concluded that the sixth feature failed at the moment, that is, as a generally accepted payment method.
Original link: https://cointelegraph.cn.com/news/cryptocurrency-is-a-failure-as-a-currency-says-brazils-banking-chief