Opinion | President of the Brazilian Banking Federation: Cryptocurrency is not real currency and does not perform any functions of currency

Source: CointelegraphChina

Editor's note: The original title is "President of the Brazilian Banking Federation said: As a currency, cryptocurrency is a failure"

Brazil’s banking chief believes crypto is a failure as a currency. But in neighboring Venezuela, it has “changed the destiny of the entire country.”

Murilo Portugal, president of the Brazilian Banking Federation, believes that cryptocurrencies are not real currencies at all.

Portugal made the remarks during a debate at the Fernando Henrique Cardoso Foundation, a non-profit think tank, on the “Impact of the Digital Revolution on the Financial System.” The debate focused on the impact of emerging technologies on the financial services industry, including blockchain, cryptocurrency, big data, artificial intelligence and fintech.

Portugal argued that “cryptocurrencies do not perform any of the classic functions of money,” adding that they are not a unit of account, a means of exchange or a store of value.

They are actually called coins, but they are not coins, which is why it is cryptocurrencies. They do not perform any of the classic functions of money, which is to serve as a unit of account that people can use to price goods. It is also not a means of payment, nor a store of value, because its volatility is very high.”

Portugal is a respected figure in finance, with a degree in economic development from Cambridge University and a former executive director of the World Bank and the International Monetary Fund (IMF).

He went on to theorize that money and information are becoming one, predicting that data and information will eventually be regulated in the same way as money. “I think we’re already seeing that happening.

Bitcoin is a “tool currency” in Venezuela

Even in neighboring Venezuela, where hyperinflation is rampant, Bitcoin is not being used as a traditional store of value, according to a report published March 24 by the Open Money Initiative.

The report by data scientist Matt Ahlborg examined the impact of a multi-day power outage in Venezuela and its relationship to local bitcoin trading volume, as well as trading between bitcoin and other South American currencies.

It determined that Bitcoin is being used as a “tool currency” to transfer value from Venezuela, rather than regular currency, with senders holding Bitcoin only as long as necessary and converting it to dollars or stablecoins as quickly as possible. The report states:

“Bitcoin is not used as an end point as a store of value, but as a conduit to get dollars, Colombian pesos, Chinese yuan, and various stable currencies.”

However, Ahlborg concluded that this is a very valuable use case for Bitcoin:

“It’s not unreasonable to suggest that Bitcoin may have facilitated billions of dollars’ worth of censorship-resistant value transfers between Venezuela and other countries over the past few years. If we consider this to be a real possibility, then Bitcoin has already played a role in changing the fate of an entire country.”

Is Bitcoin a store of value or a form of currency?

Bitcoin's ability to function as a currency has been hotly debated. Some have argued that it is "digital gold," including the Grayscale Bitcoin Trust, which has launched a public campaign around the concept. In a blog post published in February, U.S. exchange Coinbase argued that "Bitcoin is a store of value that competes with gold in the digital age."

Antonio Madera of Cointelegraph explored this question in an article at the end of February. He spoke with Antoni Trenchev, managing partner of the cryptocurrency banking app Nexo, who believes that Bitcoin is a store of value:

“The early narrative was that Bitcoin was going to be a revolutionary currency and p2p payment system. I don’t think that has come to pass in any way. Bitcoin has the functionality of a currency, but it’s being used more as a store of value and a transfer of value, especially large amounts of value.”

Madeira wrote that Bitcoin exhibits five of the six characteristics of money — durability, portability, divisibility, uniformity, and limited supply. However, he concluded that it has so far failed in the sixth function, which is to serve as a generally accepted method of payment.

Original link: https://cointelegraph.cn.com/news/cryptocurrency-is-a-failure-as-a-currency-says-brazils-banking-chief