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DB: Greater regulation and security needed to establish cryptocurrencies as new asset class

08 December 2017  |  3812 views  |  0 Source: Deutsche Bank

As Bitcoin smashes through the 15,000 US dollar mark, Deutsche Bank Wealth Management examines the risks of investing in so-called cryptocurrencies and whether they could replace traditional money.

In the latest CIO Insights Reflections, the Chief Investment Office argues that cryptocurrencies remain a risky investment, given that recent price rises have been due to speculation as well as imbalances between supply and demand. Greater regulation and security may be necessary to establish cryptocurrencies as a viable asset class in future.

If cryptocurrencies are to replace money, then they have to fulfil money’s three core functions: as medium of exchange, a measure of value and a store of value. To do this, cryptocurrencies must be more trusted. Problems here include high volatility and possible price manipulation as well as data loss or data theft.

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