Cryptocurrency

Why and how cryptocurrency’s scope declines if seen as a speculative asset

Former Reserve Bank of India (RBI) governor Raghuram G. Rajan said that cryptocurrency as a speculative asset disguises its scope of it. Rajan was speaking at CNBC International TV and on the sidelines of the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland. “The biggest problem with centralised entities in the cryptocurrency industry is that they have a single-point failure which puts user funds at huge risk,” Tarusha Mittal, chief operating officer, and co-founder, Unifarm and Dapps told FE Blockchain.

Rajan further explained that the collapse in prices of digital assets in the past year will allow investors to focus on the ‘true value’ of this new technology.

It is to be further noted that the overall cryptocurrency market shrunk by $1.4 trillion, with bitcoin losing 60% of its value in 2022. “Every fact and statistic indicates that it is not a race or a competition where either centralised finance (CeFi) or decentralised finance (DeFi) needs to win. Industries, governance, and academics need to put collaborative efforts to change the models of the modern financial ecosystem,” Yudiz Solution, Chairman and Director, Bharat Patel, added.

As per industry experts, the fall of FTX was good as it will shift the focus onto decentralised organisations. “Assets with speculative value tend to be more volatile. We should see cryptocurrency’s recent collapse as long-term volatility rather than its demise,” Suman Bannerjee, chief information officer (CIO), Hedonova, a US-based hedge fund investment firm, added.

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