In light of global crises, including the Corona virus, is Bitcoin a safe haven for wealth?

In light of global crises, including the Corona virus, is Bitcoin a safe haven for wealth?

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Researcher Shatha Khalil *

Translated by : mudhaffar al-kusairi

The spread of the new Corona virus in China and the continuing global turmoil, especially the conflict between Washington and Tehran, there is growth in Cryptocurrencies.

Some experts today believe that Bitcoin (the most popular electronic currency) that can perform the asset protection function, in the event that it has turned into a preventive asset.

Digital currencies raised a hot topic at the World Economic Forum held last month in the Swiss city of Davos, to discuss how to manage world affairs, and the crypto (Bitcoin and its sisters) and digital currencies were discussed in central banks.

A toolkit has been launched for the CBDC, the tools are intended for everyone, whether rich or poor, large or small, and it allows to speed up transactions for users or to conduct cross-border transactions from one bank to another, and the establishment of a CBDC toolkit in cooperation with more than ten central banks, a group of financial institutions, academics and other international organizations.

The Bank of Thailand and the Central Bank of Bahrain use these tools, according to a statement by the World Economic Forum, and the Bank of Thailand has announced that it has completed experiments with Hong Kong to obtain a prototype.

In Singapore the first new crypto brokerage trading platform aimed at attracting traditional institutional investors to the crypto market has been announced, under the name of Huobi platform for clients and institutions that will offer competitive transaction fees at the lowest prices.

The platform takes advantage of the “smart ordering” strategy, which means that it will link with other trading platforms and OTC offices to obtain currencies at the cheapest prices.

What is Bitcoin :
It is a digital currency that promotes an open financial system that anyone can participate in, that is used and distributed electronically, and the name of Bitcoin is a decentralized peer-to-peer network, and is not under the control of an institution or one person, and that currency cannot be printed and the amount is very limited – only 21 million Bitcoin , and that’s all that can be created.

Bitcoin was first introduced as an open source program by an unknown programmer, or group of programmers, under the nickname Satoshi Nakamoto in 2009. There have been many rumors about the true identity of the Bitcoin origin, but all of the people mentioned in these rumors have publicly denied being Nakamoto.
Nakamoto had once claimed that he was 37 years old and lived in Japan, however, because of his fluent English and its no-description programs in Japanese, there are reasonable doubts about this information.

Around mid-2010, Nakamoto switched to other things, leaving Bitcoin in the hands of a few prominent members of the Bitcoin community, and Satoshi appointed Gavin Anderson as its main developer.

Who controls Bitcoin? Decentralization where Anderson wanted Bitcoin to continue to exist independently, even if “he had an accident”.

The main advantage of Bitcoin is its independence from the banks, companies and governments of the world, where no single authority can interfere in Bitcoin transactions, or impose transaction fees or seize people’s money, in addition, the Bitcoin movement is very transparent – where every transaction is stored in a general account book , a large-scale distributor called Blockchain.

Bitcoin is not controlled as a network, it gives users full control over their money.

It works where the user only sees a quantity of Bitcoin on his wallet and the results of transactions, and behind the scenes, the Bitcoin network shares a general book of accounts called a “block chain”, and this book of accounts contains every transaction that is processed at any time, and then the digital records of the transactions are merged into Image of “blocks”.

If someone tries to change only one letter or number in a set of transactions, it will also affect all the following blocks, and because it is a general accounts book , any error or attempt to cheat can be easily monitored and corrected by anyone.

The user wallet can verify the validity of each transaction, and the truth of each transaction is protected by digital signatures corresponding to the transmission addresses, so it may take a few minutes for mining Bitcoin transactions to complete.

Digital currencies between supporter and opponent
Supporters argue that positive cryptocurrencies lie with the freedom to design for Bitcoin, with freedom in mind, and most importantly, liberation from the governing authorities that control transactions, impose fees and control people’s money, when it comes to buying things, digital currencies have become legitimate just as Paper currencies in recent years, given that there are many deep online markets that only accept Bitcoin, you may be able to buy some things easier with Bitcoin compared to any other currency.
And the transfer speed, which means it should be easy to carry and use, and since Bitcoin is completely digital, practically any amount of money can be carried on a fast drive or even stored online.

Digital currencies give people the freedom to send and receive money by simply scanning the QR code or wallet click on the Internet, it does not take time, and there are no exorbitant fees, and the money goes from person to person without any intermediary, and all you need is an internet connection.

Freedom to choose the amount of the transaction fee, or choose not to pay it at all, as the transaction fee is received by the mining operator, after the creation of a new block with a successful margin, and the sender usually pays the fees in full, while deduction of this fee from the recipient can be considered a non perfect payment.

Transaction fees are completely optional, and they serve as an incentive for miners to ensure that the special transaction is included in the new block being generated, and that incentive also acts as a source of income for miners.

There is another view that dealing in digital currencies is not free of negatives and fears of trading and working with them, as legal issues differ greatly in the legal status of Bitcoin from one country to another, in some countries, the use and trading of Bitcoin is encouraged, while its use in other countries is prohibited and prohibited by law directly.

Because of the possibility of attracting Bitcoin to outlaws, some media have even reported that its popularity is entirely due to its ability to spend on illicit goods, and indeed when the infamous black market “Silk Road” closed, Bitcoin immediately declined in value.

Lost keys:
The key is the unique alphanumeric password necessary to access the Bitcoin wallet, and losing this key mainly means losing your wallet, however, most existing wallets have backup and restore mechanisms, but the user needs to set them up before he can use them.

In addition to the Bitcoin price suffers from the fluctuation , ups and downs, it has undergone various cycles of massive rise and then decline, which some refer to as bubbles and recorded recessions throughout their history.

Bitcoin managed to record new heights, only to drop dramatically immediately after, as its value is unpredictable, and it changes rapidly and dramatically, which can cause great financial harm to any reckless investor.
In the same context, in a report published by the Russian “News Re”, the author Mikhail Ismailov, said that regulators around the world are still unable to determine what the cryptocurrencies mean and their essence.

Some believe that part of these currencies is real and complete power, and others consider them merely a means of payment, while others think that it is a risk that exacerbates criminal activities around the world.

Despite all this, the rise and fall in the value of digital currencies has affected not only the minds of novice traders, but also active players with experience in the market.

The question here is: Is it possible for the digital currency to play a preventive role against crises?
Promote the idea that Bitcoin plays a protective role in the first place by those who trade in cryptocurrencies, but not exactly as they promote, as it needs the process of regulating the digital currency at the legislative level, and therefore all speculations that go in this direction seem unrealistic or biased.

The protective asset needs three basic characteristics, namely the need to be “traditional and familiar, recognized” by all regulators in the world, in addition to the need for high liquidity, digital currencies do not have these properties yet.
There is an experience in Singapore and Switzerland that is particularly interesting, but the real motivation for recognizing cryptocurrencies remains to ensure the position of these currencies within the United States.

Security and respect for property rights is important to preventive assets.
Experts in this field believe that digital currencies will ultimately not replace investment tools as much as they offset the means of payment, but this issue is still under discussion and development, and that central banks around the world will search for consensus in ideas in one way or another.

Expectations:
It is clear that the Bitcoin currency will witness some fluctuations in the coming periods, its value may decrease, and the main fluctuation factor will be about trading information about the cryptocurrency regulation methods in different countries.

Finally, the cryptocurrency as an instrument of interest to a particular group of enthusiastic speculators or outlaws , and not the regular investor in the long run, and it is very possible that the use of digital currencies will double in light of certain circumstances such as evading legal or other issues, and this use will grow in large quantities even in the absence of legislation regulating exchanges against cryptocurrencies.

Economic Studies Unit
Rawabet Center for Research an