Over the years, blockchain technology has gotten a lot of attention. Even if the first application of this technology was cryptocurrencies, it has subsequently been used in many other fields that depend on data collection. Blockchain has been lauded by many who see this technology as being capable of revolutionizing the world. However, like with every other technological development, there are those who believe that blockchain is going jeopardize the current ecosystem.
Blockchain To Jeopardize The Financial Ecosystem?
Financial technology has long been considered a systemic risk to the economy as a whole. This is according to the reports by the United States Depository Trust and Clearing Corporation that was released on the 11th of December. According to the survey, 20% of the respondents said that fintech is one of the system risks that will affect the global economy next year. The last time this survey was conducted, only 15% or the respondents believed that fintech is going to affect the global economy. This means that the numbers are up by 5% since last year.
The managing director and CSO is DTCC Stephen Scharf, said that the increase in the number of people concerned about fintech shows that there has been a growth in awareness about the possible risks attached to emerging technologies. This thus makes it important for us to highlight and compare the advantages and disadvantages of these fintech initiatives. In his words:
“As the financial industry continues to adopt emerging technologies like blockchain, cloud computing and artificial intelligence, we need to make sure that these innovations do not end up jeopardizing the security and safety of the financial market on a global scale.”
Cryptocurrency: A Key Application Of Blockchain Technology
If you take one look at the current situation in the cryptocurrency market, you’ll have no choice but to admit that there is some truth to the result of the survey. While cryptocurrencies have been proven to be a cheap, fast and decentralized means of sending funds across the globe, they have also been classified as high risk assets because they are highly volatile and fueled by speculations.
Bitcoin (BTC) Price Today – BTC / USD
This time last year, cryptocurrencies starting with BTC started a bull run against the USD. This bull run led coins to their all time highs. BTC went as high as $19,500. So many speculators dived into the market to make a quick profit. What happened next was unexpected and can only be possible in such a volatile market. The price of Bitcoin and other cryptocurrencies started falling drastically against the USD. For the past eleven months, all the attempts by the bulls to come back into the market have failed. On Friday, the largest cryptocurrency per market capitalization fell as low as $3200. Right now, it is hovering above $3260 but declining against the USD.
So, considering cryptocurrencies alone, it’s easy to see why many experts in the traditional financial sector frown against blockchain technology. Less than a month ago, an executive of the European Central Bank said that BTC is “the evil spawn of the financial crisis of 2018”.
The CEO of Allianz, a major investment management firm, Andreas Utermann, said that cryptocurrencies should be declared illegal. He made this comment during a panel discussion in London. His suggestion was backed by Andrew Bailey who said that cryptocurrencies have no intrinsic value.