Canadian-based precious metals royalty and streaming company Metalla Royalty & Streaming CEO Brett Heath has warned that the emergence and growth of cryptocurrencies offers a foundation for the next financial crisis.
Speaking to Kitco News, Heath said all historical financial crises have various attributes in common, including mass adoption of a new financial product or a new technology.
He singled out the 2008 wide-scale adoption of mortgage-backed securities and the tech boom in the early 2000s while noting that cryptocurrencies are heading in the same direction. Brett added that cryptocurrencies would potentially face the same fate and collapse.
As cryptocurrencies grow in value, Heath notes that they are offering the private sector a chance to print more money while questioning the rarity of digital assets.
According to Heath, cryptocurrencies currently have the potential of rising further in market capitalization, and if the sector collapses, the capital will be wiped out, creating a recipe for crisis.
“This is the type of situation where it has the recipe to create a significant financial panic. Who knows how high it goes? The crypto market could go upwards of $3 trillion, $ 4 trillion, $5 trillion…you really just don’t know how high it goes. But when you have that amount of capital wiped out of digital wallets across the globe, you better believe there’s going to be some significant financial repercussions,” said Heath.
Heath projects further complications ahead-considering there are thousands of available cryptocurrencies, with a majority lacking utility.
The executive acknowledged that blockchain technology is beneficial. Still, new cryptocurrencies are emerging with similar attributes without any uniqueness, and they will be the main casualty in case of the sector’s meltdown.
However, he maintained that some cryptocurrencies would sustain the collapse and dominate, similar to Google during the tech boom wipeout.
Other bitcoin alternatives might emerge
Heath states that although bitcoin has a significant market capitalization with massive adoption, a better asset might emerge in the future. However, he cited some of bitcoin’s shortcomings, such as the carbon footprint, as a significant setback.
For investors, Heath advises finding alternative digital gold away from bitcoin. He cited investments in gold royalty companies as the ultimate digital gold since investors still control their assets away from government control.
Watch the video: Cryptos will lead the next financial crisis, here’s why – Brett Heath