Commentary- there are good reasons to invest in bitcoin

 Commentary- there are good reasons to invest in bitcoin

Corporate leaders need to be prepared for the tipping point where the risk of not having Bitcoin outweighs the risk of owning it, Dambisa Moyo tells the Financial Times.

NEW YORK- Skepticism about the viability of cryptocurrency has its roots in the structure of money as a medium of exchange, unit of account and store of value.

Bitcoin's critics point to its volatility and lack of flexibility in transactions, but business leaders have very good reasons to invest in it.

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Moreover, to gain the status of a medium of exchange, money must be widely trusted and have a critical mass of users.

Critics believe that the value of cryptocurrencies is too volatile, which makes it difficult for corporate leaders to effectively plan and manage their businesses.

According to a report by JPMorgan, Bitcoin's realized three-month volatility, or actual price movement, is 87 percent, compared to 16 percent for gold.

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They provide an alternative way to conserve parks. Unlike conventional currencies, they do not carry the risk of inflation, so they can maintain purchasing power in real terms.

In this sense, they can avoid the risks of devaluation caused by wasteful governments. They can also provide stability and transparency in a politically volatile environment.

Finally, many emerging markets rely on remittances. Remittance flows to low- and middle-income countries hit a record $ 548 billion in 2019, exceeding foreign direct investment ($ 534 billion) and overseas development assistance (about $ 166 billion).


Of course, there is a strong case for cryptocurrency as a store of value - akin to digital gold.

However, it is less clear whether they will be able to solve the structural problems associated with exchange and unit of account.

It can be argued that a redesign of the global financial architecture or system is already underway, with China being the largest trading partner, foreign direct investor and lender to both developed and developing countries, and the second largest foreign lender to the US government after Japan.

Commentary: there are good reasons to invest in bitcoin

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