After having seen Bitcoin trading near $20k last year, the coin’s current price, which is currently at the $3,500-$3,900 range, is undoubtedly not a cause of celebration as far as investors and traders are concerned.
However, a former Citigroup executive says that the falling price of Bitcoin might be good for the future of the cryptocurrency industry.
Bitcoin’s Low Price Could Push Its Usage in International Remittance
In an interview with the Nikkei Asian Review, Tsutomu Fujita revealed that the current low price of Bitcoin could push its use as a tool for international remittance.
Fujita is a former Citigroup Global Markets Japan vice chairman and an adjunct professor of the Graduate School of Hitotsubashi University.
Fujita believes that cryptocurrency has the potential to compete with existing remittance options because distributed ledger technology – the technology powering cryptocurrencies – can transfer money fast and securely.
And now that Bitcoin, the largest crypto by market cap, has fallen below $4000, it could make the coin attractive as a remittance tool as long as this price decline will be followed by price stabilization at that level.
Fujita told Nikkei Asian Review that:
“In order for cryptocurrency to evolve as a tool for international remittance, it must be keenly priced and stable. You cannot have the price moving up and down like a roller coaster…So it is important for the price to be stable in the vicinity of its fundamental value. From that perspective, the decline and stabilization of the price is most welcome.”
Cryptocurrency’s Future Could Be in the Remittance Niche
The cost of international remittance in Japan and Asian countries is quite high and is currently around 0.9 percent of the value of the money sent.
Crypto could capitalize on its speedy, low cost and secure delivery to eventually dominate the international remittance business.
In fact, Fujita believes that the only value of cryptocurrency is in its use as a remittance tool; everything else is just speculation.
“Distributed ledger technology — the technology behind cryptocurrency — has the potential to enable money transfers quickly and inexpensively. That is, in my view, the fundamental value of cryptocurrency. Everything else is just hype — especially the idea that is an get-rich-quick speculative investment.”
Regulation and Institutional Investors
Fujita believes that regulation should be in place before the market sees a marked increase of institutional investors in the space.
In fact, he firmly believes that strong regulation is one of the catalysts for the market to expand.
“Those adventurous people who say that tighter regulation is bad for the future of cryptocurrency are quite wrong. Markets grow if you regulate them and create a sense of confidence. Nobody will trade cryptocurrency if they do not know when the market might be hit by a major misconduct scandal. Rule must be enforced and observe. It is encouraging that the market is heading in that direction.”