BSTDB head reveals main risk of Bitcoin

The main risk of Bitcoin is its independence from central banks and the lack of an economic foundation under it - this is fraught with the creation of a parallel mirror system that can devalue the existing cryptocurrency, President of the Black Sea Trade and Development Bank (BSTDB) Dmitry Pankin said in an interview with RIA Novosti, Report informs.

“As for the cryptocurrency, I don’t see an economic basis here - the Central Bank, trust in the country should stand behind the currency,” Pankin said on the sidelines of the St. Petersburg International Economic Forum.

He reminded that cryptocurrencies only have a registry mechanism, trust in a computer algorithm. “No one can guarantee that tomorrow there will be no new parallel bitcoin, a mirror system that will devalue the existing one,” Pankin added.

“I believe that there is a lot of risk in the securities market, in the foreign exchange market. But there is even more unpredictable risk here,” he concluded.

Bitcoin is an electronic payment system and a payment unit of the same name. The first bitcoins appeared online in 2009, and a year later, the cryptocurrency was first used for payment. Bitcoin exchange rate is very volatile and has experienced many ups and downs over the years. Not so long ago, on April 14 this year, Bitcoin reached an all-time high of almost $64,900, and now it is experiencing a decline. So, on June 9, on Binance, the largest cryptocurrency exchange in terms of trading volume, Bitcoin traded around $35,100.

In Russia, in July 2020, President Vladimir Putin signed a law that allows transactions with digital financial assets (DFA) from 2021 but bans cryptocurrency as a means of payment in Russia. Turkey and China have recently banned the use of Bitcoin to buy goods and services. On June 9, El Salvador became the first country in the world to recognize Bitcoin as a means of payment - the same as the US dollar.