Cryptocurrencies – Trends and Associated Risks
Automatically translated summary. The full text is available in Romanian.
Cryptocurrencies have gained enormous popularity in recent years, changing how people view traditional financial systems. An Expert-Grup article explains what they are, why they work poorly as a means of exchange and are traded mainly as investments, and why such investments remain highly volatile and risky.
Cryptocurrencies are encrypted digital currencies validated by decentralised blockchain technology rather than a central intermediary. As a means of exchange they are held back by few accepting merchants, national bans and slow processing: a Bitcoin transaction averaged 10.83 minutes in August 2024, sometimes taking hours. They are backed by nothing, so prices swing sharply: Bitcoin rose from about USD 30,000 in summer 2021 to USD 70,000 and fell to USD 35,000 in early 2022. Illicit crypto transactions reached about USD 24.2 billion in 2023, or 0.34% of total volume. Mining also consumes enormous amounts of electricity.
EU Regulation 2023/1114 takes effect in December 2024. In Moldova, virtual asset services are banned under Law No. 308/2017, with administrative and criminal penalties, and banks may not admit residents' transactions with foreign providers above MDL 50,000 a month. The article concludes that the potential is large, but volatility, fraud, cyber risks and environmental impact are serious.
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