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In recent years, cryptocurrencies have seen significant demand from investors, especially after being listed in the ETF investment fund, which opened the door to predictions from specialists in the economic field; some believe they will threaten global central banks in the future, while others predict they will collapse.
The beginnings of cryptocurrencies date back to 2008, when an anonymous Chinese man using the pseudonym Satoshi Nakamoto invented the first digital currency known as “Bitcoin,” which spread in 2009 and became widely traded, especially among illegal networks that employed it in dubious business operations, due to the currency's ability to hide its owner's name, making it difficult for authorities to track it, and this usage raised widespread concerns, prompting many countries to ban it in 2021.
These currencies are traded through dedicated digital platforms, the most prominent of which is Binance, where investors can trade, buy, and sell them similar to traditional trading in conventional currencies like the dollar, riyal, and others.
Former U.S. President Donald Trump announced last March that five cryptocurrencies would be deposited into the new U.S. strategic reserve, including Bitcoin, Ether, and Ripple.
Cryptocurrencies possess a high market value of about $3.5 trillion in the global economy.
Despite the fluctuations in global financial markets, cryptocurrencies have still witnessed a significant increase in recent times amid numerous questions about whether they will threaten traditional currencies or not.
Dr. Mohammed Al-Qahtani, an economic expert from King Khalid University, stated in a statement to (Mal) newspaper that digital currencies do not currently pose a direct threat to central banks, but he expects they will negatively affect them in the long run.
He said: “In the near or medium term, I do not believe that cryptocurrencies pose a real threat, especially as traditional currencies such as the riyal, dollar, and euro are still backed by governments, and no major country has abandoned them yet, but in the long run, I believe they will affect the role of central banks in the world.”
Al-Qahtani confirmed that digital currencies provide a new model for decentralized finance that could contribute to reshaping the global banking system, but he stressed at the same time that concerns about their use in illegal activities, such as suspicious sites engaged in illicit trade, continue.
He indicated that the possibility of integrating these currencies into the global financial system will remain, provided they are regulated in a way that considers risks and ensures transparency.
Al-Qahtani said: “Bitcoin is the first and most famous decentralized cryptocurrency, and it has begun to shift from just a technological experiment to a financial asset traded globally; its future could take several paths, as it could be used as an alternative asset to hedge against inflation like gold, especially in economic crises. There are also developing countries with weak currencies that have started to rely on Bitcoin as a way to bypass their traditional financial system.”
On the other hand, Faisal Al-Doukhi, the economic analyst specialized and holder of an OKR certificate from the Key Performance Indicators Institute in Australia, stated that cryptocurrencies have become an essential part of the financial system as it stands now, believing that these currencies will bring about radical changes in how individuals and companies deal with payments and investments in the future.
A group of studies revealed that the number of cryptocurrency traders could reach 851 million, expecting revenues to exceed $45 billion during the current year.
Al-Doukhi confirmed to (Mal) newspaper that cryptocurrencies will be an alternative option for investment and payments, especially with the increasing interest in financial technology.
He pointed out that cryptocurrencies should be subject to clear regulatory and legislative frameworks governing their use in order to achieve a real global impact.
He said: “An effective government will contribute to enhancing the stability of cryptocurrencies and increase users' trust in them, especially in light of the significant volatility seen in the global cryptocurrency markets.”
He added: “Although some countries have allowed bitcoin to be included in their reserves and sovereign investments, investing in these currencies remains high-risk due to its significant vulnerability to economic variables, governmental policies, and market speculation.”
He continued: “Cryptocurrencies may pose a challenge to traditional currencies such as the dollar, euro, and riyal, but it is not expected to replace them currently or in the near future, as traditional currencies are backed by governments and central banks, which gives them stability and globally recognized value.”
For his part, Dr. Mohammed Al-Abbas, an academic and economic expert for (Mal), stated that he has been following the cryptocurrency market since its emergence in 2008.
Al-Abbas said: “At the beginning of the emergence of digital currencies, it was difficult for investors to trade them, but it has become easier today with the emergence of digital applications and platforms that facilitate buying and selling operations.”
The economic doctor believes that digital currencies have turned into digital assets, confirming that over time they will see exhaustion, or that their value will rise significantly.
In response to a question about the reasons for the rise in the value of digital currencies, Al-Abbas answered: “The process of producing these currencies requires high electricity consumption, which exceeds the cost of producing them.”
He added: “Banks and some countries have started to engage in purchasing cryptocurrencies, while the blockchain technology that these currencies rely on remains limited, making it susceptible to reaching a stage of self-sufficiency or recycling,” pointing out that this could lead to market monopolization, which would drive their prices to rise to a certain limit before these currencies turn into cash, leading to a decrease in their value and causing them to collapse forever. $BNB
