test. ♪ >> yard with al jazeera. and these are the top stories. . boris johnson survived a challenge to his position as prime minister. more than 40% of his colleagues casting ballots against him. another group of refugees and migrants have set off one of southern mexico, heading north towards the u.s. border. they timed this to coincide with a summit in los angeles. a team from the u.n. nuclear watchdog is trying to reach the russian controlled region power plant in ukraine.

they are worried about warnings from ukraine's atomic regulator that they have lost control of nuclear material at the plant. the former leader of the extreme right wing proud boys group is facing a new charge over the january 2021 attack on the u.s. capitol. he's used to plotting the attack. those of the headlines. the news continues here after inside story. ♪

>> they have been called the future of money, but cryptocurrencies like bitcoin look to be in trouble. they are losing value as financial regulators are considering tighter controls. so can crypto make a comeback? this is inside story. ♪ hello and welcome to the program. i am hashem ahelbarra. cryptocurrencies like bitcoin have been some of the most popular investments during the past few years. they emerged a decade ago as an alternative to money, free from the control of governments and central banks. but now, that is changing. at its peak last november, one bitcoin was worth $67,000.

now it is down more than half to $31,000. other digital currencies have also fallen sharply. analysts say high inflation has made risk investments including bitcoin less attractive, and the cost of running cryptocurrencies transactions has increased due to higher energy prices around the world. developing countries have led the growth in digital currencies. vietnam recorded the greatest crypto currency activity during the past year. it is followed by india and pakistan where peer-to-peer transactions have risen. in nigeria, crypto is the preferred way to trade, especially with china. the government even lost their own digital coin the year before. and cryptocurrencies are in demand in afghanistan, a country in turmoil and among the poorest

in the world, where it is hard to handle traditional money like the u.s. dollar. digital money is getting popularity in argentina. researchers found it has the world's highest proportion of workers being paid in cryptocurrencies. many by bitcoins to protect themselves against an inflation rate of 50%, and swings in the value of the country's currency. >> crypt station's goal is to make the use of crypto currency common in the real economy. it is used as a method to save money due to inflation. beyond that, we want to turn crypto currency. --into a daily life currency. >> it not based on the country's economy, so this benefits me quite a lot. even if the local currency loses value, cryptocurrencies not based on the argentinian peso,

so it will always keep the same value. hashem: let's bring in our guests. in london, chief market analyst. in rome, professor of international finance and commodities. in singapore, director of a financial technology research and consulting firm focused on asia. welcome to the program. according to the economists, the market value of cryptocurrencies was almost $3 trillion in november. then it fell to $2 trillion in april. now it is that $1.2 trillion. could this be the beginning of the end for crypto currency? >> thanks for having me. i think this is a bold statement, because crypto is a different beast. it is a beast of its own kind. let's look at bitcoin's price

history over the last 10 years. one thing becomes very prominent. bitcoin is capable -- first of all, bitcoin retains 50% to 60% of its value, and it is capable of recovering those losses within quarters if not months. in fact, we have a history of bitcoin making all-time highs. what investors and traders need to focus on when it comes to bitcoin is two important factors. from a price perspective -- if you look at the trend for the last number of 10 years, you'll see higher lows forming each year. that is a clear indication this is an upward trend. number two is the adaptability. more institutions, hedge funds, and regulators are saying yes to

bitcoin or cryptocurrencies. as long as these two trends remain in place, i am not concerned. hashem: ok. many are now blaming central banks for what happened to the cryptocurrencies, particularly when it comes to tightening of monetary policy. do you see it as a direct consequence of what is happening? >> no, i don't. i think in cryptocurrencies, a currency is a misnomer. we have an experiment going on in el salvador, where the governments made bitcoin a legal tender. and the evidence from all the research i have seen, and there is some out there, is the vast majority of people in el salvador took the initial money they invested and have not used it since. it is not being used as a currency in any meaningful sense. cryptos are a speculative asset

class, and as such, they are perfectly ok as a speculative asset class. they are high risk and potentially higher reward. you do see these very large swings as part of the system. the reality is that as interest rates are rising -- and they are going to be rising globally, two things are happening. one is we are going back to a more traditional pre-even global financial crisis, monetary and fiscal environment. secondly, we are going to see a situation where investor's risk appetites are going to be reduced. a large part of the run-up in crypto prices and reptile attractiveness was because you have this wall of money seeking yields anywhere. as a consequence, once that wall of money begins to recede, then the need to seek out ever more

speculative high risk high reward asset classes, not just crypto but other forms of assets, will recede with it. as a speculative asset class, is perfectly fine, perfectly reasonable. as a currency, it does not work. hashem: ok. why is crypto currency so popular in asia, particularly in vietnam? >> i think for many of the reasons brian mentioned. it is a speculative asset, and when you look at the various jurisdictions across asia, directly china runoffs and the stock market. people see crypto currency and speculative asset classes as a way to make a lot of money. whether that be real estate or the stock market or now crypto currency. and so i think a lot of investors or retail speculators are treating it like that, so that is why we are seeing a lot of adoption. there are certain use cases though. when you are trying to move

money around the world there are a lot of fees involved in making transactions. so cryptocurrencies can see these niche use cases in many emerging markets were oftentimes moving money cross-border is cheaper than using traditional currencies. and so i think outside of the speculative asset, there are some use cases, but as was hinted at before in places like el salvador, spending on a day-to-day basis, we really do not see that adoption at this point. hashem: i understand when you talk about the swings in the cycles of the markets and you say this is pretty much normal and that cryptocurrencies remains resilient in the face of the downturn. but for a normal, average citizen who would like to invest in cryptocurrencies, or contemplate that in the future, how can you explain to him the algorithmic stable coin, tera for example, which stood at

something like $50 billion, and ended within a few weeks, worthless. >> this is a new paradigm. experiments are being done. some of them are successful and some are not. and unfortunately, terror is an example of one of them. but investors in this space, one should only invest what they are willing to lose, just like any other investment pieces. and you should always look to hedge your risk against a asset classes. you may be wondering, if we are speaking of cryptocurrencies, why are you speaking of different asset classes? you have to think from a traditional mindframe when it comes to cryptos, because within cryptos you have different sectors, just like the s&p. you have gaming, defi, crypto exchanges, cryptocurrencies, and ethereum colors.

as long as you have diversified against these particular sectors, which i have mentioned on your show a few times before, one should be ok above position to take advantage in this speculative space. hashem: art the same time you have the usdc, another stable coin, just because it is backed by cash and short data treasury bills, it does not seem to be facing the same problems as other currencies -- other cryptocurrencies are. could this be assigned a trust remains paramount when it comes equipped the currency? >> stable coins are an interesting situation because you basically have two kinds of stable coins. one which are allegedly fully backed, although it is unclear the extent to which these are fully backed by dollars or dollar equivalents. you of one's backed by other

commodities, including cryptos. the latter two under no circumstances would be considered stable. but the first one is the paradox of crypto. in order for this crypto to be stable it has to utilize fiat currency. as been said, it is a speculative asset class, not a currency. however, what would you put your money into a dollar back to crypto when you put it into a dollar backed bank? when i say dollar, any fiat currency, which would be supervised and regulated. if tomorrow morning a dollar backed crypto stable currency was to evaporate, basically the investors in it have lost everything. if a bank were to go into difficulties, there is usually deposit insurance and we see banks typically get heavily

bailed out and -- so it shows the roots of their failure as alternatives to currencies. as an asset class we have all agreed they are perfectly fine. but the majority of the hike certainly around cryptocurrencies is not as an asset class. it is more around the fact they will replace fiat, they are a current -- a hard currency, etc. > hashem: if i'm a member of the crypto currency community in a place like india, and i look at the market now, and that i know that the government does not like crypto currency, moving forward towards putting more restrictions -- what kind of future do you see for crypto currency in a place like india? >> the indian story is really about the population. it is a massive country and is

unable to crack down in the same way china did on crypto. if you look at crypto in china up until five or six years ago it was a thriving industry with many companies focused on various different use cases, from exchanges to payments and everything else. india has a lot of that same potential but the story is the same. the government is not in favor of crypto because it does not see what it adds to the ecosystem but rather only sees the risks that come out of having it there. so they have come down hard more recently. they put a 30% tax on crypto investing and legislation is unclear about the future. soapy -- so people in the crypto ecosystem in india are considering their next steps. this has been the status quo in india for a number of years now. i think we will see countries like india kind of teaching you to figure out the way with crypto. even certain countries like here

in singapore, we thought it would be very pro crypto but they are pulling back. it is difficult to tell what the strategy or trajectory in any of these asian countries is. hashem: i assume many in the past were drawn into the currency world because of the most established of all those crypto was, particularly bitcoin. now it has lost 50% of its value and a latest forecast suggests it could fall to something like $8,000 compared to where it stood a year ago which was something like $68,000. how do you see it? could it recover from that? >> before i answer your question i just want to add to what you were discussing before about stable coins. it is very, very important to understand, when it comes to stable coins, when that happened, i literally locked

myself for 14,000 and read every single research paper and what was happening during that particular meltdown. and i came to the conclusion to one particular factor, which is called a bank run. this usually happens when there is so much instability in the system and people lose faith in a particular currency, and begin to withdraw. manipulations do take place in traditional markets as well, believe it or not. but in the fiat space, but other traditional markets. to simplify things, during the peak crisis, in india or anywhere else, we have regulated, central banks literally stepping in and limiting the amount of withdrawal anyone can make on a daily basis. we have seen examples of that increase happening.

in stable coins, we cannot have that mechanism, because that goes against that decentralizing, stuff like that. the second thing which people really confuse about stable coins is clarity. i am not saying that is not true. it is absolutely true what has been said. how much clarity do we have in relation to fiat currencies, which are backed by what a government promises. it used to be backed by gold. yes, nowe -- now we have more clarity, although cautions are still out there. but the main issue is a bank run, which is a control of how much money can be withdrawn in a single day. if there is a panic today, you cannot withdraw that fund.

hashem: when the european central bank president said bitcoin and all the other cryptocurrencies are worth nothing, what is she trying to tell us here? >> she is trying to tell you that they have no fundamental value whatsoever, which is absolutely the case. so they are worthless but not value less. they don't have a fundamental value. they don't have yield, they don't give you a return, you cannot really spend them anywhere, and you cannot pay taxes with them, etc. so in some sense as they are the like fiat currencies, except you can lend them to people and they can give you stuff. you use that to pay your taxes, etc. they have fundamental value. as a consequence, any value they have is a value that is believed to be one that they will be able to accrue in the future. so in that sense it is a little bit perennial.

i believe crypto has value because i believe somebody else will believe in the future they will have an increased value and therefore i will hold onto them for dear life until i can get rid of them to somebody else. in traditional financial markets that is called the greater fool theory. hashem: could the selloff be an opportunity to get rid of the flawed cryptos and badly run companies that could regenerate a new face for the market to rejuvenate, to move forward? >> i think the crypto industry is no stranger to these cycles. if you look three or four years ago, the ico's of initial offerings which were largely pedaling new business models which made no sense whatsoever. with the crypto industry over the past couple of years has been able to take advantage of is liquidity in the market. quantitative easing and the cheap money people had access to. and very easy for people to

invest in crypto and companies, even if they didn't have the best business model. in many cases that is not limited to crypto. we are seeing that across venture capital now globally. evaluations are coming down, it is much more difficult for startups to raise capital. we are seeing that already and it will probably get worse later in the year. it is the same with crypto. investors will be pickier about what they invest in. that said, you will still have organizations investing heavily in some of these crypto spaces, whether nft's or metaverse or otherwise. so it remains to be seen but i do not think we are done on this. hashem: i have a few different angles to cover with you gentlemen. we are not talking about figures, stock market, we are talking ultimately about lives and dreams that have been shattered over the last few weeks with the meltdown. people who have been investing

in the cryptocurrency and saw their savings wiped off. we spoke about the clarity and the transparency. do you think this is time to rethink the whole disclosure procedure, the backing these companies have, and what kind of assets they have for people to say i trust there is backing for this company and at the end of the day i can expect returns and the yields? briefly, if you don't mind. >> sure. so i think there is significant need for a mechanism to come into place, where regulators are providing their support, or at least assurance. but at the end of the day the responsibility lies with the investor and the investor only. hashem: are cryptos paying the price for mirroring the stock market itself? when we saw how it all started,

the central banks starting quantitative easing, the increasing of the interest rates, suddenly we saw the stock market nosedive and dramatically. could this be a correlation? >> i don't think so. there is a correlation between broader market movements and cryptos, but if crypto and investors are paying the price for anything, it is in investing in a bubble, and we know how and bubbles end. they burst and destroyed a lot of wealth. this is what happened in the crypto market. bubbles are endemic. the nature of these markets is they are totally unregulated. that is there attraction and their destruction. the only way in which you can have a market which was not subject to these kinds of problems would be a market that

is regulated in which was monitored. but that would be an typical to what the crypto enthusiasts want. hashem: is asia bracing for a crypto winter? >> certainly. that is what it looks like. maybe asia has become -- there is a lot of money flowing into the region and a lot of value that was created and that has not been lost as crypto is growing in this. asia will face the same challenges every other market does, if not more in certain markets that have invested heavily and startups that have focused heavily on this space. hashem: we need to talk about the big bitcoin minors, now -- miners, blamed for what happened because the used -- the use of energy when it comes to their

computers to coin the cryptocurrency is responsible for the meltdown. >> not necessarily at all. the latest headline in nigeria, far more energy is going to be used for mining. i think the attitudes need to shift to what is renewable and to mint bitcoin or other cryptocurrencies are significant. that is the momentum we are seeing where we sit. hashem: we have to leave it there. thank you all very much indeed. and thank you too for watching. you can see the program again at any time at aljazeera.com. or go to our facebook page. you can also join the conversation on twitter. from me and the entire team, bye for now.

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