West Africa: ECOWAS Parliament Lists Dangers of Cryptocurrencies, Cautions Against Use

By Michael Olugbode

The ECOWAS Parliament has cautioned against the utilization of cryptocurrencies as a way of exchange and commerce.

Rising from a gathering of its joint committee in Ouagadougou, Burkina Faso yesterday, the ECOWAS Parliament stated that there’s a cause for concern with regards to the danger factors involved.

The meeting prospects were that the cryptocurrencies are used as a facilitator for investment in West Africa and attending cryptocurrency experts and resource persons.

The meeting added that the sharp decline within the value of Bitcoins over recent weeks may be a reminder to all or any that cryptocurrencies aren’t safe assets, hence their use on the African continent is not without dangers for several reasons.

The joint committee also reminded the sub-region that cryptocurrencies are often refused for payment without contravening legal provisions.

It added that crypto-assets aren’t a way of payment and can’t be likened to e-cash, whilst cryptocurrencies were also identified as extremely volatile, due to restrictive issuance mechanism that encourages speculation.

The joint committee stated that like all other digital payment instruments, Bitcoin is usually attacked by pirates.

The committee urged cryptocurrencies enthusiasts to protect against the danger of theft, adding that if the cryptocurrency is naturally inviolable, portfolios, on the other hand, are not.

Among the risk factors identified is that cryptocurrency is an insecure liquidity, given the shallow depth of the foreign exchange market and high concentration of assets (96 per cent of bitcoins are believed to be held by 2.5 percent of users), a liquidity problem may arise.

Another risk factor of cryptocurrencies identified by the committee is that it’s an irreversible transaction.

The transaction cannot be cancelled when the sender notices a mistake, as only the receiver can decide to return them.

The committee said another source of concern to its use was that it had almost no authority to regulate it.

The joint committee, however, said the boom of Bitcoin and therefore the growing popularity of virtual currencies had caught the eye of monetary authorities, while governments have started giving them an idea .

It noted that some countries have made efforts to place in situ regulations and have made some progress.

Source: This Day