UAE Exchange CEO Promoth Manghat says cryptocurrencies aren’t something he would ever consider investing in and that businesses and consumers need to understand there are ways to work with blockchain technology without having to delve in cryptocurrencies such as Bitcoin, Ethereum or even Ripple.
“We should really differentiate between cryptos and blockchain. They are two different beasts,” he told Arabian Business this week.
"We endorse the blockchain because it can revolutionise the way payments are done. Cryptos are different. They are unregulated, and so we don’t see them as being scalable."
Manghat made news last week by announcing that UAE Exchange would partner with Ripple, becoming the first payment services provider in the country to do so.
However, he insists that the partnership is relying solely on blockchain technology, RippleNet, and not its associated cryptocurrency that trades under the XRP ticker.
“When we say Ripple, we mean just the blockchain. The company has a separate crypto element called XRP, but that is separate and we have nothing to do with that. In the blockchain that we are talking about we still use fiat currencies,” he said.
Fiat currencies are paper currencies regulated by central banks and backed by no other commodity except government guarantees since the 1973 collapse of the Bretton Woods system that used gold to back the value of the dollar onto which all currencies then fixed their value.
Often overshadowed by its crypto-coin, Ripple is a company with a number of products in its portfolio, only one of which involves any kind of move away from fiat currencies.
Its most widely supported solution, xCurrent, is currently being seen as a possible replacement for the SWIFT messaging system that banks and exchange houses currently use to communicate financial transactions.
“The Ripple network has a simple proposition: instant messaging. Money transfers can happen in real-time, and help make the settlement of a transaction, still an archaic process that can take up to 72 hours sometimes, instant,” said Manghat.
That technology, he added, is at complete odds with what cryptocurrencies are attempting to do.
“My personal view is that if it’s not regulated it’s not safe. [Currencies like Bitcoin] are not an asset class that I would look at from an investment perspective. And I wouldn’t advise anyone should gamble with their investments. Coming from a middle income family, I know how hard-earned money can be, and I would never take this risk with my investments.”
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