Author: Mario Ramòn Duarte – 06/05/2021
Virtual currencies, also known as cryptocurrencies or crypto assets, had improved in the last 2 or 3 years to a vertiginous rhythm in the area of commercialization in the virtual scope, going practically from being considered in a moment, an issue of science fiction to become nowadays science action.
In an article that I wrote for the digital site ALAI by the year 2018, I described the meaning of them, their characteristics, functions and several cryptocurrencies existing in that opportunity around the world, that is why I believe that before starting fully in the proposed topic, it is a good idea reminding these basic issues for a better understanding of them.
To begin recalling the about the article I wrote in 2018, where I said that the cryptocurrencies were a new way of global commercialization, capable of revolutionizing everything that was known as a way of commercial of financial exchange and it is a fact that nowadays this is becoming undoubtedly real, it is every time greater the number of people or users that invest in crypto assets.
But to go on with our purpose, what a cryptocurrency is then? Conceptually for those who have not commercialized it yet, or have not even tried to understand what is the world of virtual currencies about. The cryptocurrency is an exchange currency as a financial commercialization pattern, the same as the physical paper money, with the difference that this is of virtual characteristics, that is to say in the new environment in which we are daily and which we are building very slowly.
The cryptocurrency can be exchanged and operated as any other traditional currency, but among one of its fundamental characteristics that we cannot describe quickly, but otherwise, we have to give it the correct importance that it deserves; cryptocurrency is out of control from the governments and also of the financial entities, they are statements of when I wrote the mentioned article, that is a preamble to the present one. Nowadays this is only regulated in some countries according to the local laws, but the truth is that there is no global and standardized regulation as regards cryptocurrencies.
Cryptocurrencies can be considered as valid alternative to the traditional currencies, and without a doubt everything indicates that goes fully to this no small target, besides they would be conceived as a fully conventional payment method, besides it is true that its validity as a payment method fully is fundamental for its worth, because these habitually are more like the raw material as for example the gold in the Forex Market (the biggest financial assets market in the world).
To finish with this introduction a bit overwhelming but necessary to understand the geopolitics of the digital currencies or cryptocurrencies, plus the more than necessary uniform and global regulation of them, at the mercy that this is the big deficit that they endure nowadays and there are several cases that I will mention later and that cannot go on happening because every bad deeds goes to the detriment of those who struggle for the financial or commercial exchange of this new modality, typical of the times we are living. In one opportunity I expressed about the etymology of the cryptocurrencies that the firs starting operating to a world level was the Bitcoin, a cryptocurrency that is still leading the crypto market. This virtual currency started functioning in the year 2009 and its creation is attributed to the japanese Sathochi Nakamoto, who used the set of cryptographics functions Sha-2 (exactly the Sha-256) as his pow scheme (work test). From the creation of Bitcoin to the date countless types of virtual currencies have appeared and I will also make the respective analysis including different characteristics and protocols.
Well, getting fully into the proposed thematic one of the fundamental factors to develop is without a doubt the regulation of cryptocurrencies, and that obbey to the great uncertainty around its functionality in different countries, the prevailing vulnerabilities are also highlighted (the case of Coincheck in Japan is the biggest robbery in the history of crypto matter with u$s5,000,000 in 2018 or lately in the Thodex platform in Turkey for hundreds of million dollars to more than 390.000 users) but above all the need of clear rules of the game in goods that have an exponential growth year after year from its creation. In order to have concrete data the investments in crypto assets tripled in the last year, with a big number of investors and new economic agents that started acting Exchange of the crypto market.
During the 2020 pandemic context in between, the profitability of virtual currencies reached a 500% despite they had fallen 30% at the beginning of the pandemic, but it was only one that recovered and gave an extraordinary profitability, reaching the u$s40.000 by the 2021. That is why I always remark in each one of my analysis that the world has changed and as a consequence of the pandemic and several factors in long term, such as digitalization of our lives, that is every time a more effective and concrete reality, it has given place to technological elements of avant-garde such as the ones we describe today, besides the Blockchain or Fintech technologies.
Now it is good to have a more or less exact outlook of the regulations in the world and what is in process yet, especially in our region and our country; Why is this an imperative need? A very important one, and in a way to make a brief allusion to it, is that Bitcoin is on its way to be recognized as an international currency. The greatest digital system of payments; PAYPAL, has joined the market of cryptocurrencies, giving the users the opportunity to send, receive and pay in cryptocurrencies through their virtual wallets, and besides it is said about PAYPAL that its users will be able to use cryptocurrencies as a payment method in more than 26 million of branches, at least in a first moment without extra fees.
The regulations in the world vary according to the countries and/or regions. For example in the U.S.A there is no Federal legislation that regulates the crypto phenomenon, although some local states do have legislations such as for example New York that in 2015 and since 2019, 32 states more boosted the use of Bitcoin and the accounting technology Blockchain. The E.U. has started working in some recommendations and regulatory framework for the crypto phenomenon through the Digital Finance Package. ASIA, the Asian markets have been intensifying the regulations about crypto assets and as they search, strengthening the commercial market and attracting institutional investments. LATIN AMERICA in our region the crypto phenomenon regulation is very new, and there are 2 countries that are avant-garde of the matter they are Mexico and Colombia, apart from the fact that Argentina is also studying a project of regulation that is still in stand-by. Although it is true that in the mentioned outlook ut-supra, we cannot skip the other virtual currencies that are also Avant-garde in different parts of the world such as: Ethereum, Litecoin, Ripple, Dogecoin, Coincheck among others besides Diem, the virtual currency of Facebook that will be supported by fiduciary currencies such as the dollar and the euro.
But where the true geopolitical battle takes place, without a doubt between the U.S. and China, they have many silent battles in crypto matter. On one side, the E-YUAN that the Popular Bank of China designs, is being tested by first level entities in their territory and two giants of technology: Alibaba and Tencent. Meanwhile the Fedcoint, colloquial name for these moments for the currency that is being developed by the Fed and the Technological Institute of Massachusetts; according to the expressed by many experts, the most prestigious Educational Establishment in the planet in technological issues and that has graduates of the size of Tim Berners-Le, the creator of the world wide web.
Buy not only these two countries (U.S.A. and China) – although they are big actors of the fight for getting its owns digital currency- are the ones that move along in this path, they also are: England, Japan, Sweden, Frace, Brazil and Argentina from Latin America each one of these countries with its intention. Brazil is trying to transform its platform of immediate payments, PIX, into a cryptocurrency and Argentina is searching the legal framework for them.
To finish this present article, I reiterate and remark that this Covid pandemic that devastates the world is making clear several teachings in the middle of the big crisis, and one of them is that, the countries that do not support the new technologies or at least get interested in them, for the purposes of counting with a real knowledge of its citizenship, having always Man in the centre of all and each one of the benefits that these can provide, will hardly be actors of the new world in which we are starting to walk and that will finish to be strong post-pandemic, without a doubt full of opportunities, knowing always that there is a lot to do yet.
Sources
Cuarta Revolucion Industrial: analisis estrategicos. Edit. Phillos Academy (2021). Autor: Mario Ramón Duarte (Ctes-ARG).https://www.iproup.com/finanzas/20941-criptomonedas-que-paises-avanzan-con-su-propia-divisa-digital
Dr. Mario Ramòn Duarte
- Lawyer (UCASAL)
- Administrative Judge of Misconduct Sauce (Ctes.) M / C
- Misconduct and Misconduct Law Specialist (UCSF)
- Geopolitical Dossier Member (CBA-ARG)
- Iberoamerican Network Member
- International Cybersecurity and Cyberdefense Analyst.