By Hlengiwe Ndlovu | 2018-02-15
IN an unprecedented admission that sent shockwaves globally, the Chief Executive Officer of one of the world’s most successful cryptocurrencies, Ripple yesterday said that he believes all digital currencies are set to plummet in value to a price of zero.
Brad Garlinghouse’s warning comes after popular cryptocurrency Bitcoin’s dramatic decline since the beginning of this year from a record high of about E180 000 to about E80 000 within a short period of time.
Attracted by Bitcoin’s lucrative value, many people in Swaziland have invested in this cryptocurrency even though it is not a legal tender. However, not many people are forthcoming with disclosures about their Bitcoin investments as they prefer doing this discreetly.
University of Swaziland Lecturer Sanele Sibiya had earlier this year warned that Bitcoin would collapse, although he did not mention other cryptocurrencies.
The Express UK reported that Garlinghouse was speaking at the Goldman Sachs' Technology and Internet Conference where he said he believes ‘most’ digital currencies will eventually lose their value. He reportedly said: “It's not clear what the use case is.
“It's not clear what the value proposition is. “Long term value will be dictated by the utility of that asset.” Garlinghouse reportedly warned that cryptocurrencies are too unpredictable to be widely used due to largely being unregulated and with very volatile price markets. In 2018 a number of countries have introduced new rules for using the original cryptocurrency which is believed to have affected its market performance. Despite Garlinghouse’s fears that most cryptocurrencies will drop to zero, he does still believe Bitcoin will end a success.
Cryptocurrencies world over also sparked taxation debate with some tax jurisdictions like South Africa reportedly establishing mechanisms to tax their earnings.
However, the Swaziland Revenue Authority (SRA) indicated that it was far from introducing measures to tax cryptocurrencies as they were still trying to understand this phenomenon. SRA Director of Communications Vusi Dlamini when asked to share the tax authority’s stance on Bitcoin said: “I am sure you will appreciate that many revenue administrations worldwide are still studying the cryptocurrency phenomenon. For now, nobody is clear what bitcoin is.
Is it a currency or a good? What exactly is it? Obviously, for tax, purposes we need to answer such questions and may be many more before we determine what taxes need to be levied,” he said. SRA is not the only tax jurisdiction with a skeptical view of Bitcoin.
MoneyWeb recently reported that the main challenge for tax authorities world over in trying to determine a Bitcoin trader or investor’s tax liability centres around the cryptocurrency’s nature.
“While some tax jurisdictions regard Bitcoin as a currency, others consider it an asset. Most international jurisdictions are treating it as an asset at this point.
Yet one of the biggest hubs, Japan, has classified it as a legal tender,” a MoneyWeb report states.
The European Banking Authority has also issued warnings to the public about the risks associated with virtual currencies and recently indicated it will apply anti-money laundering and anti-terrorist financing rules to virtual currencies.
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