FinancialCentre reports – CEO of Bank of Sharjah says Blockchain is here to stay but is difficult to regulate

London, UK, 5th Feb 2022, ZEXPRWIRE, Cryptocurrencies or “cryptos” are a type of encrypted digital currency that is decentralised and exists completely online. In 2009 an anonymous individual(s) using the pseudonym Satoshi Nakamoto introduced the world to bitcoin, a digital peer-to-peer cryptocurrency that uses cryptography (the art of writing or solving codes) to control the creation and transfer of money. The first, most well-known cryptocurrency is Bitcoin, which has reached market dominance by achieving a total value of $57 billion at the time of this publication (CNBC).

FinancialCentre Broker Julian Bennet said that Bitcoin was created as an alternative to fiat currencies like the U.S. dollar, the Euro, and the Yen. Unlike most currencies that are controlled by a centralised authority like a country’s central bank or government, cryptocurrencies are decentralised. This is because they run on peer-to-peer networks where all transactions take place between users without an intermediary.

Fast and improved alternative

The goal of creating this type of currency was to allow for fast transactions that would remove third party oversight and fees. It was imagined as a more democratic form of currency with instantaneous transactions that would give consumers the power to control their own wealth as opposed to large centralised bodies controlling the money supply.

Cryptocurrencies have been around for more than a decade now. However, most people have only recently heard of them because they’ve seen huge price rises in the last couple of years. This is because more people are investing in cryptocurrencies, causing their prices to go up at a very fast rate. Cryptocurrencies can be purchased and traded like any commodity or stock, and people who invest early in a cryptocurrency like Bitcoin often see huge returns.

Julian Bennet says that one drawback of cryptocurrencies is that because they are not tied to any fiat currency, their prices tend to fluctuate very wildly. This means that if an individual invests $500 into a cryptocurrency and its value goes up 10% the next day, they may have made $50 in profit. However, if its value goes down by 10%, that individual would have lost $50. This makes it difficult for people to play long-term investments with cryptocurrencies because there is no guarantee that they will ever see their money again.

Blockchain

A blockchain is a public ledger where all transactions made using a cryptocurrency take place. Each transaction is grouped into a block and then added to the chain in chronological order, hence the name blockchain. This way, everyone can see which transactions took place and how much value belonged to each address at that time in history. Since everything is done digitally and records are kept on computers instead of paper, this public ledger can be viewed by anyone.

Julian Bennet believes that this also helps prevent people from spending the same money twice by recording every transaction in the ledger that keeps track of all funds. Cryptocurrencies are based on blockchain technology which is what makes them special and allows for quick transactions with minimal fees; however, there are other applications for this technology. Since blockchains are entirely digital, they can be used in any situation where fast and secure transactions need to take place.

This has led many people to strongly believe that there is potential for blockchain technology to be applied in the fields of government, insurance, retail/ e-commerce, healthcare, etc.

Here to stay

The CEO of Bank of Sharjah, Varouj Nerguizian, is one of the few individuals who believe in the potential of Blockchain. He says that Blockchain is here to stay. He thinks that Blockchain and crypto are two things that are not going away anytime soon and that they will form a very significant part of the present banking system. He emphasised that although Blockchain has immense benefits for our financial systems, it is very hard to regulate. He called it a double-edged sword.

He said that Blockchain is a cutting-edge technology that has yet to be fully comprehended by the banking sector as a whole. While Blockchain’s use in Know Your Customer [KYC] and real estate title deed verification, for example, is simple to understand, it purportedly allows parties to exchange value without the need of an intermediary. This raises worries from government officials.

Julian Bennet says in this regard that this is a relatively new technology that ultimately establishes a decentralised network to verify transactions between people. However, because there isn’t a central party that oversees the whole process, it becomes difficult for governments to regulate how cryptocurrencies are being used. It is true that digital currencies can be used in money laundering and other similar criminal activities. This is why, today, many countries have banned the trading of cryptocurrencies within their borders.

However, this doesn’t mean that Blockchain and cryptocurrencies will cease to exist in these regions. There are ways to implement blockchain technology within the borders of these countries, which means there is still room for growth.

Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.