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Kuwait International Bank raises banking safety awareness
KUWAIT CITY, July 12: Kuwait International Bank (KIB) continues to play an active role in enhancing financial literacy within the community through its various educational engagements – including several initiatives and engagements dedicated to support the national “Let’s Be Aware” awareness campaign. As part of these efforts, KIB has been rolling out a series of awareness-focused educational initiatives across its social media platforms and digital channels, most recently discussing the risks associated with investing in virtual assets and currencies, including cryptocurrencies.
Addressing this timely topic, the General Manager of the Investment Department at KIB, Jamal Al-Barrak, emphasized the importance of conducting extensive research prior to engaging with any investment tools, be it shares, real estate or any other investment instrument, including – and especially – virtual currencies. He noted that it is vital that novice or amateur investors familiarize themselves with all the aspects of the tools they are considering, to safeguard both their assets and their data security, and achieve the best possible outcome required from such a venture.
Diving deeper into the topic, Al Barrak outlined the main reasons behind the emergence of digital currencies and the factors that contributed to its rise in popularity since 2008 – with the topic reaching a peak level of interest today. Al Barrak noted that the urgent need for quick income, especially in light of the opportunities presented by the technological and digital revolution that affected all business sectors, aided in promoting virtual currencies as an easy method to profit and generate revenue through in vestment. This prompted many individuals to actively trade in this type of asset, hoping that its value will continue to increase over time.
While the creation of virtual currencies may have been mainly driven by a quest to liberate the existing economy, in an effort to circumvent the global restrictions and regulatory frameworks imposed on traditional currencies and monetary trade, Al Barrak noted that the absence of sovereign control over digital currencies has been continually posing risks for investors. Without a central supervisory authority to monitor, evaluate and regulate the issuance of encrypted currencies, in a manner that protects investors and traders and reserves their rights, fraudulent trading can easily take place and may expose investor’s assets and finances to extreme losses.
He also pointed to the threats associated with trading in unrecognized currencies, given how the anonymity of their issuance can allow for trading under false identities; potentially making it a tool for illegitimate use and illegal transactions, such as money laundering operations, electronic fraud, and so forth. Al Barrak also touched upon some of the difficulties that arise when monitoring price movements of cryptocurrencies or attempting to control its market value. “These currencies are considered an intangible asset, which cannot be used in the real world and can only really be invested in “online”, which means a single electronic incident or digital mishap can lead, within seconds, to a sudden rise or a sharp fall in a virtual currency’s price value”, Al Barrak indicated. From this viewpoint, Al-Barrak went on to elaborate on some of the cybersecurity risks that come with investing in virtual currencies which can pose serious threats to a trader’s assets.
He noted that an entire digital platform, set for the trading and storage of an encrypted currency, remains exposed to all sorts of cyber hazards, attacks, and intrusions, along with the fact that thousands of people can be trading digitally on these platforms with millions of dollars’ worth of investments. Al-Barrak clarified that each platform accordingly plays a role in controlling trade.
However, a currency’s value can easily drop in a matter of moments and cause rapid price fluctuations across the entire trade, in instances where its platform gets hacked electronically and goes out of service. Adding to that, Al Barrak stated that one of the other main factors contributing to both constant and sudden fluctuations in price for any virtual currency, is the high speed at which positive or negative news about this asset is circulated between traders, in addition to the wider audience reach facilitated within the high-tech digital environments in which they operate.
According to Al Barrak, such open and free mediums can allow for rumors to be easily spread among digital investors, as well as news from online portals of unknown origins, without the censorship or supervision imposed on traditional media. He added: “One leaked conversation about a particular cryptocurrency to speculators can directly cause either an abrupt collapse or a major rise in its value, with every trader rushing to withdraw and protect their assets from potential loss, before even verifying the authenticity of that news. Something that can affect the accuracy of currency valuation, as well as the financial analysis of its charts”.