Historically, when people lost confidence in a currency they have looked to gold as a safe haven. Now, as the UK looks to leave the European Union, investors and business alike are turning to cryptocurrencies as an alternative to provide stability.
Cryptocurrencies have a number of key advantages over normal currencies. They are not run by central bankers with political masters and agendas. The stability of digital currencies comes from the transparent system used to hold, buy and sell them. Every transaction is recorded on a ledger: it’s open and verifiable.
Danial Daychopan, Plutus CEO, says, “National currencies are reliant on people’s faith in governments and the global financial system. There’s nothing inherently stable about them. In economies that aren’t stable, we’re already seeing digital economies developing and thriving. Cryptocurrencies are based on secure, reliable technology, and are decentralised, which makes them an excellent tool to weather a financial storm.”
Leading economists are predicting that Brexit will have far reaching implications. A run on the Pound is feared; something that would see international investors racing to sell off sterling and sterling assets, in the process driving down the value of the currency. Business investment is also likely to suffer in the fallout, with major multi-nationals preparing contingency plans to move activity to mainland Europe should Britain leave the single market without a deal.
In other regions that have experienced economic instability crypto has been part of the answer. In Africa, countries have capitalised on mobile money solutions, particularly crypto, to make transactions. However, this isn’t just reserved for undeveloped areas: South Africa’s first cryptocurrency ATM opened in Johannesburg in early May, showing the extent to which it has become part of daily life in the nation’s largest city.
Goldman Sachs, as well as a number of trusted Swiss Banks, have been rapidly developing their cryptocurrency offerings. Goldman Sachs have even introduced their own currency, the Circle USD Coin, although its value is tied to the dollar. This represents a significant vote of confidence in cryptocurrencies and blockchain as stable way to store and transfer wealth. Likewise, global consultancy firm EY recently expanded its blockchain strategy with the acquisition of the Crypto-Asset Accounting and Tax (CAAT) technologies developed by Elevated Consciousness.
Daychopan adds, “As veterans in the space, we’re excited to see what widespread adoption will mean for crypto. We’re approaching a period of instability and people need to understand that cryptocurrencies are going to be a force for good, not just tokens to be speculated upon.”