The war between Russia and Ukraine may provide an opportunity for crypto to enter the mainstream: CEO of KuCoin, Johnny Lyu in 2022
According to Johnny Lyu, chief executive of KuCoin, one of the world’s largest cryptocurrency exchanges, the Russia-Ukraine war has demonstrated that cryptos are not only a tool for hedging but is also easy for mainstream transactions, including donations because they are easier to transfer between countries in times of crisis than traditional assets. In the long run, India’s cryptocurrency regulations and plans to introduce a central bank digital currency will only benefit the sector.
What is the definition of a cryptocurrency?
Have you ever received a paper token instead of a tiny change from a burger shop, which he would accept the next time you visited him? Let’s imagine a digital version of that token, and you have your cryptocurrency. The main difference is that there is no owner-issuer in this case, and it would be accepted universally, at least in theory.
It is a digital or virtual coin protected by encryption, making counterfeiting nearly impossible, and is designed to be used as a medium of exchange for purchasing products or services and have their store values. Cryptocurrencies are decentralized, which means they are not regulated by any central body.
These are based on blockchain network technology, which provides transparency and facilitates transaction tracking. Such currencies are unaffected by government intervention or manipulation. These currencies are inflation-proof because they have no underlying economic base and the digital structure allows for free portability across national borders, as well as divisibility and transparency.
And they are frequently chastised for the potential for unlawful use, exchange rate volatility, and the vulnerability of the infrastructure that supports them. Thereafter various questions were answered by the chief executive of cryptocurrency which includes:
India recently enacted cryptocurrency taxation. Will this have an impact on India’s image as a technological leader and exporter?
On this question, he answered that India is the first country in the world to issue a cryptocurrency regulation. We think it’s good news because it shows that the government is receptive to technological development as long as it’s prepared to control the business.
We also feel it will aid in the protection of cryptocurrency investors. In addition, we’ve noted that crypto assets, such as the NFT, are rising in India, which is planning its own CBDC (central bank digital currency). All of these encouraging factors point to the industry’s long-term expansion in the region. We believe that crypto and blockchain technology will be the way of the future and that this will help India maintain its position as a global leader in IT exports.
Several experts and bureaucrats have expressed concern that bitcoin lacks underlying security and hence poses a risk to the country’s financial stability. What are your thoughts on these issues?
When I first started in the industry, I was curious about the underlying worth of bitcoin and cryptocurrency. But, after more than four years in this profession, I’ve discovered that there are two types of values. The first sort of value is comparable to stock market value. Why are stocks valuable? This is mostly because it is based on a real firm, and the company’s performance has an impact on the stock’s value.
Then there’s the value that comes from reaching an agreement. It would be valuable if everyone believed in it. Why do we believe that fiat (money) is valuable? It’s because everyone thinks it’s worth something. That is also the situation with bitcoin.
It was established by a tiny group of nerds at first, but as time passed, more and more individuals began to believe in the technology’s potential. This has resulted in the increased value of bitcoin, as well as other cryptocurrencies.
Will central bank digital currencies have any effect on the current cryptocurrency market?
Every year, we consider the question. Many institutions began investing in cryptocurrencies last year, and an increasing number of countries began to accept them. It has even been recognized as a legal currency in several countries.
Whether it’s regulating exchanges or granting CBDC in the country, strong regulation is always a beneficial thing in the long run. Technology is always devoid of bias. However, like with any new technology, the government will require some time to become accustomed to it and comprehend how it operates.
KuCoin has collaborated with several regulators to identify the best path forward for the sector. All other cryptocurrencies will gain in the long run as more governments begin to regulate and create CBDCs.
What impact will the Russian-Ukraine crisis have on cryptocurrency volatility?
Crypto is a relatively new asset when compared to other assets. This may be the first time crypto has been involved in a conflict. To be honest, we misread the current situation since we believed bitcoin and other cryptocurrencies would provide a strong hedge against the performance of other assets.
We discovered that as bitcoin becomes more mainstream, its performance would be influenced by the performance of other cryptocurrencies. As bitcoin becomes more ubiquitous, we’ve seen that its performance will be influenced by the performance of other assets. When people are in a panic, they sell all of their assets to raise cash to get through the bad times.
This is a terrific opportunity for bitcoin and other cryptocurrencies to demonstrate to the world how they are superior to other assets. For example, we’ve witnessed an increase in bitcoin donations under this situation. This is because transferring cryptocurrencies is easier than transferring conventional assets. It also demonstrates that cryptocurrency has worth even in these trying times.
It was previously difficult for people to transfer their assets from one country to another. In the worst-case situation, this may be easier with bitcoin and other cryptocurrencies. This could be an opportunity for crypto to break into the mainstream and gain widespread acceptance.
Even though KuCoin is active in over 200 countries and regions, India is one of our most important markets. However, when we think of India, we don’t only think about selling our services; we think about how we can use KuCoin’s service and product offers to assist the country’s citizens in the crypto business.
For example, we formed a fund in India two years ago to promote early-stage crypto businesses. We’re also collaborating with local crypto firms. For example, we’re collaborating with Bitbns, one of the largest cryptocurrency exchanges.
We’re now running a competition with Chingari, one of the most popular short-video-sharing apps. We realized that the Covid situation in India was critical in April of last year, so we established a charity fund and worked with several NGOs and local partners to provide food and goods. We’re also on the lookout for indigenous talent, and we’re planning to open an office in India shortly.
Do you believe bitcoin still gives individual investors the benefit of diversification?
We’ve seen a remarkable correlation between the price of bitcoin and the performance of US stocks over the last few months. We can hardly call it a bad thing because it is, in some ways, a result of globalization and evidence that bitcoin has entered the mainstream.
Bitcoin’s performance will inevitably be influenced by the performance of other assets. As more countries begin to embrace bitcoin, the correlation will become less and weaker in the long run. In the long run, US investors will have less of an impact on prices.
Decentralization is a term used in the crypto world. Bitcoin prices are currently significantly influenced by US stocks because they both have the same group of investors. The price of bitcoin will be less affected by moves in the US stock market as more individuals acquire it.