Bitcoin is a ‘high-risk’ speculation tool, say Saudi finance experts

Bitcoin is a ‘high-risk’ speculation tool, say Saudi finance experts

RIYADH: Bankers and economists have warned of the “significant risks” in Bitcoin trading, despite the digital currency's recent headline-grabbing valuations.Introduced in 2008, Bitcoin surged to a record high on Jan. 8 of $41,530, before retreating to $35,529 on Jan. 20.Fadhel Al-Buainain, a former Saudi banker, told Arab News that Bitcoin is a first-class speculation tool without any support from cash reserves or economic superpowers, in contrast to the valuation mechanism of currencies like the dollar, the euro and others.Bitcoin started, he noted, as an instrument for the movement of money denominated in US dollars and away from the conventional banking system, but soon transformed into an independent digital currency that is valued purely on the basis of supply and demand.“The risks involved with Bitcoin are major and significant,” he said, adding: “The first risk is that nobody knows how it started and where it gets its strength. Another risk is that it is not tied to any central bank or a financial institution that guarantees it.Besides, most of the banks do not approve it.Al-Buainain, who is a member of the Saudi Financial Association, assessed that the biggest issue with Bitcoin is the fact it has been used as a money