Investing in Bitcoin is Still Highly Speculative Says BaFin’s President
Bitcoin has been growing around the world as a very attractive asset due to its high returns in short period of times. The market is very volatile and some traders may be able to profit from it. But The President of the Federal FIinancial Supervisory Authority (BaFin), Felix Hufeld, said that Bitcoin and blockchain are on its infancy, comparing them to the first years of the internet.
Bitcoin Remains Highly Speculative
He said that the most important application that Blockchain technology has is Bitcoin, but that it can be used in many other areas including banking, healthcare or shipping industries. Due to the decentralized nature of blockchain, he said that this situation can help criminals to launder money, or finance terrorist activities.
There are different countries that have embraced this technology, including Switzerland, Estonia, Netherlands or Argentina. All of them are trying to improve services and bureaucratic processes. Even banks are using this technology to improve their products.
About smart contracts running on the blockchain he has also given his opinion. He said that they are between hype and success, but that they have different weaknesses that make the completely susceptible to cyber attacks. Moreover, he explained that these contracts are ‘not so smart yet,’ because they cannot judge a contract or change the principle behind it, but instead they are just code lines that are related to yes or no outputs.
Another important topic is anonymity. He said that users that work with crypto exchanges are starting to provide all the information required about themselves to tackle problems related with tax evasion or money laundering, among others.
And he warns that Bitcoin still remains a highly speculative asset, a total loss is still possible.
He commented that there may be a future in which people will be looking at blockchain technology and wonder how it was possible before to be transacting money without using this innovative technology.