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“Bitcoin will be a strong alternative as a safe haven”

May 29, 2020

We interviewed Raúl López, Country Manager at Coinmotion, in Spain. He told us what his vision of cryptocurrencies is in this country and in the European context. Among other things, he spoke about halving Bitcoin.

Fernando Quirós (FQ): What potential do you see for Bitcoin and cryptocurrencies in Spain? And in Europe?

Raúl López (RL): In Spain there is a large community around blockchain technology where we can find professionals with years of experience in the industry. This fact is important because it is a relatively new technology and therefore a lot of work is needed to make it known. I think we are on the right track because there are more and more associations, technology centers, courses, specialized staff, conferences, workshops, etc. related to the sector that really helps for this purpose.

“Bitcoin will be a strong alternative as a safe haven”“Bitcoin will be a strong alternative as a safe haven”

From a cheaper point of view, I think that there is also an increasing interest in cryptocurrencies in Spain. There are studies showing that every third Spaniard plans to buy cryptocurrencies in the future, and a slightly higher number believe that this is the future of the investment. However, it is one thing to have heard or to know that cryptocurrencies exist, and to use or have them is quite another. In my view, the second case is the one that occurs less, which means that it is still a long way to use it in general.

Some surveys in Spain on this sector found that very few people have cryptocurrencies. However, if we look at other countries like Finland, the level of penetration is much higher and legislation is already aligned with legislative issues related to cryptocurrencies that are mandatory in the European Union. Another example is Sweden, which is already planning to stop using cash in two or three years and use e-krona instead, a name that may have its digital currency. In fact, they are already testing the Corda Enterprise blockchain solution.

FQ: Do you see cryptocurrencies as a paradigm shift in finance?

RL: One of the main advantages of cryptocurrencies is that they are decentralized. There are investors who have lost confidence in banks, governments and the current financial system and who believe that an autonomous system that can be accessed from anywhere in the world is safer for their funds. For many investors, cryptocurrencies also create more security because if the monetary policy is unchangeable and has already been determined in advance.

On the other hand, the large number of cryptocurrencies on the market sometimes makes it more difficult to find those that are really a good investment or have a really useful practical use. The smart contracts or the mechanisms of “defending” Bitcoin against inflation could be mentioned.

For example, one could say that Satoshi Nakamoto may have introduced Bitcoin halving and the BTC limit of 21 million in his protocol because he believed that inflation could affect this cryptocurrency. In this way, he believed that he could make the BTC more resistant to depreciation over time. Therefore, the theory is that if the supply of this cryptocurrency decreases and demand stays the same or increases, the price of it should go up.

Another difficulty that I would like to highlight is that it will take some time for cryptocurrencies to be introduced and used more massively. This is crucial so that they can really be a real alternative to traditional currencies.

CF: In many countries, the global economic situation has been complicated by Covid-19 and quarantines. What role do cryptocurrencies play in this context?

RL: It’s not new that cryptocurrencies were used as a safe haven before Covid-19. However, it is true that this role has increased significantly as a result of the pandemic and that more and more people are choosing it to the detriment of gold. However, we have to point out that in some of the most turbulent moments in the markets during the coronavirus crisis, it was found that digital gold did not behave as a safe haven as expected.

In the past, gold was a haven. When certain currencies stall, people have returned to gold as a trust worthy. One of the main reasons why this precious metal is considered a safe haven is its low stock-to-flow ratio (like Bitcoin). Approximately the amount of gold increases by 1.5% each year and it is a finite asset. It’s really not a very big increase, especially when we compare it to the large amounts of money that central banks print every year. The number of bitcoins created annually was approximately 3.6%. After halving 2020, this value has dropped to 1.8%. Therefore, we can check whether the current value between the two assets is very similar.

Of course, there will continue to be a gold market, but cryptocurrencies, especially Bitcoin, will be a strong alternative as a safe haven for several reasons. Initially, their number is limited to 21 million, and this factor is immutable. Another advantage is that it can be easily “transported” and shared and also cannot be confiscated. Please also note that the storage and security costs are significantly lower.

FQ: The third halving of Bitcoin has just happened. Do you think this will affect Bitcoin’s price?

RL: Currently Bitcoin is still priced at $ 9,000 and we are all focused on the price waiting to break the $ 10,000 barrier or not. Basically, it is early to exceed this value if we consider the behavior of the Bitcoin market after halving and the macroeconomic situation we are in. It is difficult to predict whether the United States’ economic stimulus and a positive trend in reducing the pandemic, which would require, among other things, the beginning of the economic recovery, could become a catalyst to accelerate the removal of this barrier.

If we take into account the historical data of the first halving in November 2012, we can see that the price of Bitcoin remained at a stable level in the 45 days after this event. It was after that when its value began to increase. It was not until a year later that prices started to rise, especially in December 2013. The second halving in July 2016 took about four months to start rising.

After the third halving is done, we checked to see if the Bitcoin is included. In my opinion, this is mainly due to the fact that most Bitcoin investors are waiting for how the market will behave after halving in order to react accordingly. This paralysis is also due to the economic uncertainty that has arisen around the world as a result of Covid-19.

So I don’t think the value of Bitcoin will change significantly until two to four months have passed since this third halving and until a controlled global situation of the Covid 19 pandemic is registered. Bitcoin demand could continue to grow until the middle of the fourth quarter.

CF: Do you think more financial education is needed in the general population?

RL: With Coinmotion we want to improve the widespread introduction of cryptocurrencies in all our activities. We do this by training people and removing the obstacles to investing and operating with cryptocurrencies. Our goal is to create a complete cryptocurrency-based financial ecosystem. The company’s mission is to bring cryptocurrency investments into the mainstream and democratize cryptocurrency financial products.

CF: What is Coinmotion? What services do they offer?

RL: Coinmotion is a cryptocurrency broker from the Prasos Oy Group, the first company in Europe to be officially registered as a cryptocurrency operator and to have a payment license.

On the platform you can buy, save and use different cryptocurrencies quickly and with a certain level of security. Bitcoin, Litecoin, Ether, Stellar Lumens and Ripple are currently available. In addition, it is completely free to have an account on our website and perform crypto transfers between users.

In addition, there are other services that our customers use every day. For example, the paid account. This allows you to get a high level of interest in cryptocurrencies by only having them in that particular account. Another service is the monthly savings plan, which allows you to automatically buy a certain amount of one or more cryptocurrencies every month. It is mainly used to diversify investments over time.

CF: How do you work in Spain?

RL: From April 2019 – when Coinmotion became known in Spain – until April 2020, the company saw an increase in the number of registered users of + 4,993%. Our goal is now to reach 10,000 users by the second half of 2021 and to expand the range of services and products.

Last February, when the severity of the Covid-19 became known, we saw a + 53% increase in total operating volume. The same trend continued in March, with this volume increasing by + 27% compared to the previous month, when 65% came from purchasing. Very good results were also achieved in the following months. In April, the volume reached in March almost quadrupled, and the same applies in May to the volume reached in April.

CF – What connections are there to Finland?

RL: Coinmotion is part of the Finnish group Prasos, founded in 2012, with more than 80,000 customers, more than eight years of experience in the secure storage of cryptocurrencies and an operating volume of more than 220 million euros. Coinmotion has more than 45,000 registered users worldwide and the goal for the end of the year is to reach 60,000.

The Prasos Group is licensed as a payment institution and officially registered as a cryptocurrency operator by FIN-FSA (CNMV counterpart in Spain), which allows it to offer its services worldwide (with the exception of the United States under the FACTA regulation). However, we are currently focusing on growth in Europe. 80% of our sales come from Finland, our main market.

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