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'Cryptocurrency Lacks Reliability, Trust to Become Real Unit' - Economist

Cryptocurrencies are spreading like wildfire in the financial world, but some authorities see it as a matter for concern as digital currency is deemed unstable and volatile. Radio Sputnik spoke with Chairman of the Central Bank of Uruguay, Mario Bergara about the issue.
Sputnik

According to the head of the bank, the cryptocurrency will not be able to enter into circulation, as it is not sufficiently institutional and reliable to become a unit of measurement.

“The reason for concern is not so much that cryptocurrencies can displace national currencies, but rather in their instability and volatility,” the economist told Sputnik.

He further said that currency is not only a technically released asset, but an institution in the broadest sense of the word.

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“Cryptocurrencies lack reliability and trust necessary to become a real currency, unit of measurement and a payment unit,” Bergara said.

He went on saying that the insufficient control over cryptocurrency makes them an attractive tool for money laundering.

"Bitcoin is a world in which you can stay in the shadows. It can be used for shadow transactions that no one can track,” the economist told Sputnik.

Nevertheless, Bergara noted that Bitcoin in itself cannot be blamed for shadow deals, but admitted that among other things "the system can contribute to money laundering, tax evasion and the financing of terrorism."

He further said that the "mining" of cryptocurrencies does not make sense and contradicts their nature.

However, Bergara noted that the blockchain technology should be used to increase the efficiency and reliability of information coding, adding that the specialists of his bank are already studying the mechanisms of blockchain.

The technology allows registering all cases of data transmission in the form of a code. Each participant in the chain has a code that stores information about all the operations.

The views of the speaker do no necessarily reflect those of Sputnik.

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