As we hear the recent rumours that Russia's usual reserve currency, the US dollar, is to be replaced by Bitcoin, we can only assume the acquisition is both politically and financially stimulated.
Many believe it is an attempt to exhibit a move away from the reliance on the US dollar, regardless of Russia holding a record-high $462.1bn in reserve.
This alternative reserve has been perceived as a way to circumvent US Congress-imposed sanctions onto Russia; ones imposed following US intelligence claim Russia's interference with the 2016 US presidential elections, the attempted assassination of former Russian Military officer Sergei Skripal and others.
Despite Bitcoin's depression in value during 2018 (where the cryptocurrency's value dropped from $230.9bn to $66.6bn by the end of the year) Vladislav Ginko, an economist at the Russian Presidential Academy of Economy and Public Administration, stated the conversion from US dollars to Bitcoin will potentially come into action around February 2019.
This action alone should bring increased stability to the most valuable, trend-setting cryptocurrency in the world.
If Russia goes through with their investment plans, they would ascertain one-sixth of all Bitcoin, ultimately ascending the digital asset's value enormously.
Russia's approach represents a new direction of digital assets, returning the once-viral phenomenon back into investors' periphery and helping to relieve market criticism.
However, it also brings more questions to the fore that must be addressed due to the global economic impact this transition would create today, as well as tomorrow.
Most criticisms of cryptocurrencies lie in their volatility of value which, unlike traditional currencies, is not associated with entities or assets that determine a currency's underlying value.
Instead, the only data is the pure value of any cryptocurrency. If this seems rather arbitrary, it's because it is.
For this reason and others, the velocity of value transfer for Bitcoin and other cryptocurrencies is frightening to some organisations, especially traditional financial institutions such as banks and money managers.
To compound the confusion, crypto assets remain highly unregulated, adding another layer of volatility that many finance traditionalists struggle with.
Before effectively analysing and making a judgement on the feasibility of cryptocurrency, it is best to consider a significant component that has contributed to its popularity: the success of the mining process of blockchain technology, the lifeline of all cryptocurrencies.
The currencies utilise blockchain technology to ensure transactions are secure and interconnected, a concept that stands in sharp contrast to contemporary transaction recordings that rely on their independent processes.
Cryptocurrency and blockchain, although highly interconnected, have starkly different utilities. Bitcoin is a by-product of blockchain technology that has now become the gold standard for the newly conceived multibillion-dollar industry, solely due to its supply and demand.
Consequently, this product has garnered popularity and become a phenomenon that maintains the propensity to remove financial control from banks - renowned for the inability to manage customers' finances without risk.
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