The fever with digital currencies, among which bitcoin (btc) is the most popular, has been shaking the region since last year, and analysts estimate that several thousand citizens have already participated in the trade of this cryptocurrency or "miners" from Montenegro.
According to "Vijesti" information, university professors, bankers, brokers, managers of insurance companies, journalists, etc. have become involved in cryptocurrency trading. Developers who trade or "miners", i.e., are especially active. confirm btc transactions in Montenegro, with the help of special cards on one or more computers connected to foreign platforms.
"When I published my first Bitcoin analysis in 2013 and started giving lectures on this topic, the Bitcoin community was quite small and almost all of us knew each other in some way. In the meantime, there was an expansion, where not only the number of those who bought bitcoin, but also those who mined it, increased. The total number is difficult to estimate because it is not an area where such statistics are kept anywhere, but all you can know is how many 'mining' devices have been imported into Montenegro. What is indisputable is that, unlike five or six years ago, that number is no longer expressed in tens, but in thousands", financial analyst Ana Nives Radović, who at the beginning of November at the University of "Donja Gorica" told "Vijesti" defended the first academic paper in Montenegro on the subject of cryptocurrencies, in English.
Bitcoin is the basic unit of digital currency that was released as "open source software" in 2009. It is a popular virtual currency that can be used to pay for goods and services in the world, or to buy other currencies. "Mining" means using software that validates btc transactions worldwide (instead of a bank) 24 hours a day. For each transaction that the user, with the help of special computer equipment, confirms in Montenegro, by so-called "mining", he receives a small fraction of bitcoins in return.
At the beginning of the story in 2009, the total number of bitcoins is limited to 21 million and after that none will be issued, which is why this cryptocurrency has no inflation. It is estimated that by 2032, 99 percent of the total number issued will be "mined", and the last percent of btc will be "mined" for the next hundred years.
During the past 2017, all price records were broken because one bitcoin was worth $734 a year ago, and yesterday afternoon around 15.30:14.600 p.m. it was about $20, which is almost 2017 times more. Price records were broken two weeks before the end of calendar year 19.000 when btc was traded at prices of around $20.000 on some platforms and almost $XNUMX on others.
[VIDEO] WHAT IS BITCOIN FOR?
In neighboring Croatia, it is estimated that around 30 thousand people are involved in the trade and "mining" of cryptocurrencies, and a similar number is estimated in Serbia.
In the West, btc ATMs are a good way to attract tourists and increase traffic. At the beginning of December 2017, Nilo Emilfarb's company "Stratex" decided to introduce the possibility of paying for services and products with bitcoin in the Dukley hotel, restaurant and marina in Budva.
Radović notes that bitcoin was created as a result of the idea to enable electronic payment on the basis of mathematical evidence, with the aim of creating a currency without a central authority, with electronic transmission, with negligible transaction costs.
"Bitcoin is used for various types of online payments by the user sending it to the recipient's address in a message in combination with a private key, which is known only to the sender, where each user on both sides has a file that serves as a wallet, which allows the disposal of only their own money and using one amount only one time. Bitcoin functions on the 'Blockchain' platform, i.e. a database distributed between all hubs that participate in the system that includes the Bitcoin protocol, and a copy of which contains a trace of every transaction that has ever been made, so that it is possible to obtain information about the amount of Bitcoin at a certain moment was in some digital wallet", explained Radović.
Investment advisor Pavle Gegaj advises everyone to be careful if they invest part of their savings in cryptocurrencies.
"They should keep in mind that it will most likely be the riskiest part of their savings, and make an allocation accordingly. I think it is advisable to get informed about the way the market works, because the confidence of investors will depend on the reputation of the market. In the end, I would like to point out to everyone who is thinking of buying cryptocurrencies that bitcoin, as well as cryptocurrencies in general, do not have any intrinsic value in themselves, that the price is very prone to change and that in my opinion there is a solid probability of a huge loss", believes Gegaj .
Cryptocurrency excludes banks as intermediaries, and transactions are confirmed by users among themselves. Whoever wants to buy bitcoin or its fraction, the most important thing, in our conditions, is to find a reliable developer who will correctly enter a purchase order, because in case of any mistake, the money paid cannot be recovered. For payment and payment of cash transactions, you need a master's card or some other card at a domestic bank.
When asked if she trades in bitcoin and what her experience is, Ana Nives Radović says that her first encounter with bitcoin was in 2012.
"Dealing with determining the regularity of price fluctuations in regression analysis, I came across an example where everything looked much more complicated. Even then, among the group of people in Copenhagen I worked with were those who had been buying and 'mining' bitcoin for more than a year. Most did it in order to follow the development of a financial-technological process on a practical example, certainly not hoping, especially not for a big profit, because at that time it was encouraging that the price of bitcoin increased from six to 12 dollars during the year and that the money invested in research has not disappeared", said Radović.
As she added, she joined the monitoring of that process and started publishing the first analyzes in 2013.
"I was able, thanks to the price increase in the range of 50 to 800 dollars, to cover the high costs of research and equipment acquisition. For the next three years, that is, until the end of 2016, the price of bitcoin was lower than at the end of 2013, and there was certainly no room for profit in the way that many have made it in the past few months. We bought bitcoin in those years to use it as a means of payment where there were favorable conditions for it, since the increasing number of merchants around the world made them possible," Radović said.
Also, btc was used at that time to perform "microtransactions, i.e. payment of very small amounts, usually related to digital services, the price of which is well below one cent, which could never be paid with physical money".
"Entering cryptocurrency trading today for many is an attempt to make money and nothing more. However, bitcoin, which has justified the existence of cryptocurrencies on several levels for almost a decade since its creation, is still very volatile, i.e. subject to sudden changes in value and, as with everything that is traded, there is a risk. By carefully monitoring, analyzing and getting to know the opportunities, it is possible to choose a favorable moment for buying, but it is important to know that in the conditions in which bitcoin increased its value 18 times in less than a year, there remains a small probability that a similar scenario will repeat itself in the near future," she warned. is Radovic.
On the other hand, there are many "small" cryptocurrencies, which are even technically more advanced than bitcoin, although they are not present in such a large amount on the market.
"They enable and will enable in the future multiple earnings in a shorter time than will ever be possible with Bitcoin." I recommend that you pay attention to 'Cardano', 'Tronix' and 'Dash', but also all that appear in this group as alternative digital money with great potential for growth. Also, I urge you to be very careful and avoid investing in everything that their promoters call cryptocurrencies, but in fact, apart from the fact that it is digital money, they have nothing in common with them, but are very dangerous MLM schemes, such as OneCoin, SwissCoin and similar, whose promoters invite to presentations, divide investors according to levels, clubs and the like", emphasized Radović.
One of the reasons for the creation of bitcoin is considered to be the need to create an alternative to centralized banking in the post-crisis world, which is why in her book "Dividing by Zero" Radovićeva writes about the need for a different model of action created at the moment when the American Federal Reserve, the European Central Bank and other financial institutions began to stimulate the economy with quantitative easing programs, that is, by printing money and zero interest rates, creating an unsustainable system.
"Bitcoin is the answer to that, and in the decade behind us we also see that the way it is traded has given a unique and so far the most realistic example of how a healthy economic environment can be created - exclusively with a currency that does not have an inflationary character, since after the initial launch of the amount of 21 million there was no additional 'printing' of bitcoins", explained Radović.
The relationship of the banks in the whole story is specific. From the moment confidence in bitcoin began to grow, leading banks sought to knock down its value by buying at market and selling at a price of one dollar.
"They had the power to do so for a rather short time, since the increasing demand meant that the price did not drop drastically. The game that the banks later started to play could be characterized as "if you can't beat them - join them". Banks, having seen the specifics and advantages of 'blockchain', themselves became interested in the application of the infrastructure on which it rests, primarily because it eliminates transaction costs to a large extent. The adjustment process is slow, however, because it is necessary for banks to develop a network that should support a drastically higher turnover than that realized on the cryptocurrency market, but work on this has been going on for some time. Of course, the entry of giants from Wall Street into the whole story is not something that we bitcoin enthusiasts should be enthusiastic about, but on the other hand, we are pleased by the fact that cryptocurrencies are entering the wider focus of the public," concluded Radović.
The fact that cryptocurrency trading is in its infancy is also indicated by the fact that, with the permission of the Fed, bitcoin-based futures contracts have been traded on the American stock exchange in Chicago since December 18. A futures contract is a type of financial instrument (derivative), which represents in fact an agreement between a buyer and a seller on the exchange of a certain product or HoV, in this case cryptocurrency, at a special price on a future date, determined by that contract.
Futures trading allows interested investors and speculators to project the price of bitcoin in the future and to profit or lose in these transactions from fluctuations in its price.
There are 1.400 "currencies", the second largest is ether, and the third is ripple
There are a total of about 1.400 different cryptocurrencies in the world, which have been growing like mushrooms lately. Radović explained that the cryptocurrency ether is traded on a more technically advanced platform called "Ethereum".
"Ethereum represents a public 'blockchain' platform that enables the functionality of programmable transactions, providing a decentralized system for the realization of peer-to-peer transactions with the digital currency ether. "Ether is part of a network project intended for the implementation of smart contracts and the development of mutual trust among its users, without intermediaries in transactions," she explained.
The cryptocurrency ripple (XRP) has increased its value significantly in recent times and is expected to become the dominant second largest digital currency soon.
Bitcoin and many other cryptocurrencies are known for being decentralized, while the owners of ripple currency are known and that digital currency is centralized. It was created within the company Ripple, based in San Francisco.
Gegaj: It's a bubble that will burst sooner or later
Trade in cryptocurrencies in the world does not have a special regulator, which is why since the end of last year, representatives of the world's largest banks, as well as some Nobel laureates, have been asking for this type of trade to be banned. The mystery of the true creator of bitcoin has been going on since October 2008, when a scientific paper about the technology that would power digital money was published under the name of Satoshi Nakamoto.
"I would say without hesitation that the entire crypto-market is a bubble, and I think it is inevitable that it will burst sooner or later," says Pavle Gegaj.
He believes that there is almost no risk that cryptocurrencies will take over the role of a bank and thus threaten the banking system.
"The second question is whether the eventual collapse of the crypto-market could have a negative effect on the financial market in general. As things stand now, the dominant investors in crypto-currencies are retail investors, i.e. individuals, so such a possible scenario should not have a big negative effect", concluded Gegaj.
World banks ease war on cryptocurrencies
When asked whether cryptocurrencies pose a threat to commercial banks in the near future or whether banks will eventually start using them actively, Aleksandar Šćekić, expert associate for the money market and securities in the Treasury Department of Erste Bank, says that "this question is very difficult to give an answer, given that the views of banks and economic experts are very different".
"Some of the big world banks are already slowly taking an active part in the creation of 'blockchain' technology, while some of the world's leading economists still look at everything related to cryptocurrencies with great reserve," Šćekić added.
Nevertheless, analyzes of technology companies predict, notes Šćekić, that more and more banks will rely on "blockchain" technology in their operations in the near future.
"We are witnessing that the cryptocurrency market is currently very volatile (the prices of the most traded ones vary daily by up to 40 percent), and we can safely say that the opinions of experts are on the same page. So we recently saw that some bankers from the USA commented very negatively on bitcoin, and today they are already softening their stance significantly, with unobtrusive thoughts about more active involvement in trading cryptocurrencies and derivatives based on them", Šćekić added.
What is important when it comes to banks and 'blockchain' technology are the costs of use, and global banks very carefully monitor the number of active users, and compare the price of the so-called "mining" of cryptocurrencies with the standard transaction costs of banking business.
"The more significant involvement of banks will certainly depend on this in the future. In the future, banks will most likely be users of blockchain technology, but they will also compete against it. Real cooperation will come if central banks start issuing digital currencies to replace banknotes and, of course, when numerous technical obstacles are resolved in order to see 'blockchain' technology applied on a large scale," Šćekić said.
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