Does ‘CryptoRuble’ Threaten the Point of Cryptocurrencies? Jean-Yves Sireau Weighs In
Last month, Russia said it would move to regulate cryptocurrency by bringing mining and exchange under the purview of the central government. Investors rejoiced in the decision, as it signaled that another major economy would not ban cryptocurrency. However, as one prominent blockchain expert notes, the advent of a government-controlled cryptocurrency – i.e., CryptoRuble – would threaten the point of cryptocurrencies all together.
Binary.com Founder and CEO Jean-Yves Sireau (JYS) was recently in contact with Hacked.com, where he answered some of our most pressing questions. Below are excerpts from our most recent email exchange.
JYS Weighs In
According to the Binary.com founder, Russia’s plan to centralize the mining process is probably feasible, but will likely hamper the CryptoRuble’s popularity. That’s because this arrangement practically ignores one of the key selling points of cryptocurrency – that is, the potential for a universal token.
“Indeed, the attraction of cryptocurrencies is that they are like cash: easily transferrable, essentially anonymous and open to everyone,” JYS says. “A currency that doesn’t have these features is going to be at a competitive disadvantage. There are already hundreds of competing cryptocurrencies, hence creating one that has limitations is not likely to be a success story.”
As many of our readers know, Russia isn’t the only country looking to create a state-run cryptocurrency. Kazakhstan and Estonia are in the process of creating a state-run digital currency, with several others considering the idea. There has even been talk of China – a country that recently banned cryptocurrency trading – implementing its own state-run digital currency.
In Sireau’s view, there’s no guarantee that these currencies will be popular. As he rightly notes, “there are hundreds of cryptocurrencies with a very limited following.”
Russia has given mixed signals about how it plans to regulate ICOs. According to Sireau, this reflects broader confusion about how to secure a market that so few know about. Apparently, JYS doesn’t think too highly of ICOs, either.
“In my opinion most ICOs are worthless or scams, and investors will lose 98% of their money. Even if regulators do come up with regulations, it will be too little too late. In 1-2 years’ time there is going to be a flurry of lawsuits surrounding ICOs, especially in the US where law firms can organize class-action lawsuits. I think these lawsuits are what are going to tame the market, not regulatory action.”
On whether any jurisdiction approaching cryptocurrency regulation the right way, Sireau said flat-out no. That’s because “the core issue is that regulators are typically lawyers or compliance people who don’t understand the details of the technology. It’s like trying to create grammatical rules for Greek without having any knowledge of the language.”
The future of cryptocurrency looks promising, but will be marked by volatility and many failed projects. In Sireau’s view, this is especially the case with ICOs, which could “implode in a flurry of lawsuits, especially in the form of class-action lawsuits, in the U.S.”
Featured image courtesy of Shutterstock.