“Crypto Crash Showed True Value Of Digital Assets”
Former Reserve Bank of India (RBI) Governor Raghuram Rajan said that the collapse in prices of digital assets over last year will allow investors to focus on the ‘true value’ of this technology, the distributed ledger and the smart contracts that can be built on them.
“The idea that somehow cryptos are going to maintain value, while the fiat currencies collapse. That’s nonsense,” said Rajan to Reuters on the sidelines of the World Economic Forum at Davos.
The economist said that fiat currencies have won out in terms of which is more credible.
Rajan’s statements come in the backdrop of the crypto market shrinking by $1.4 trillion in 2022, with Bitcoin losing 60% of its value. However, it has clocked a 26% gain in January, breaking above the $20,000 level.
Cryptocurrencies not only tanked, but also took a credibility hit when exchange FTX that was valued at $32 billion a year ago filed for bankruptcy in November. Founder Sam Bankman-Fried was accused of orchestrating an epic fraud by the investigators.
The former RBI Governor had earlier cautioned investors about the shelf life of cryptocurrencies.
Rajan had said that cryptocurrencies do not have stable values. “You see Bitcoin go up 20 per cent, come down 20 per cent, sometimes large moves on the same day. So the notion that these are stable forms of payment relative to the fiat currencies, the central bankers cannot be trusted but this crypto can be trusted belongs to a small minority of people.”
(With inputs from Shubham Joshi)
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