Cryptocurrency, a bubble ready to burst

Two experts, invited by the Externado Financial and Securities Exchange Law Department, acknowledged the uncertain nature and volatility of this alternative method of payment.

Munir Andrés Jalil Barney, Chief Economist, Citibank Colombia, and Mauricio Pérez, Professor of the Master’s in Economic Law with Emphasis on Banking and Securities Law, discussed the impact of the eventual acceptance of cryptocurrencies as a payment method.

The meeting, organized by the Externado Financial and Securities Exchange Law Department and the Financial Law and Stock Exchange Observatory, had the objective to analyze the possible monetary field consequences of the acceptance of cryptocurrencies as a means of payment.

The guests defined cryptocurrencies as an asset, a money alternative, and stated the only difference from other currencies is the way the transaction is performed.

“What must be kept in mind is that this type of transaction will always be safer, as it is handled through blockchains, cell phone, or computer. There is less risk of theft,” said the head of Citibank Bank.

Although much has been said about this form of payment which has “boomed” in several countries around the world, the panelists emphasized that, currently, buying and investing in cryptocurrencies is a challenge for the “brave,” as this type of payment is very variable.

“When cryptocurrencies first appeared, they sold for $20,000; today, five years later, they sell for $7,000; it is a very expensive system, and aside from that, very volatile,” said Jalil Barney. Also, he added, this type of payment is still not being regulated by any bank.

For his part, Mauricio Pérez stated that for now, the public does not have much confidence in cryptocurrencies, because they do not know much about them.  However, he added, “it shows all the signs of being a bubble that will explode at any moment.”

The debate ended with questions from the audience.