According to the data of the Bank of Lithuania, cash flows from the UK to Lithuania are significantly decreasing: in 2017, the amount of transfers was 18 percent lower than in 2016 and even 28% lower than in 2015.
In total, according to EUROSTAT in 2017 , emigrants and foreigners sent 1.1 billion euros to Lithuania. Because of “Brexit”- related changes, the United Kingdom, which was the leader based on cash flows, is now third, left behind by United States and Russia.
Of course, the leaders of the European Union (EU), who recently met in a special summit, confirmed the historic Brexit agreement on the UK’s exit from the EU, which reduced the uncertainty about the future, but Lithuanians, living and working in Great Britain, are far from being guaranteed that the exchange rate will return to the height it was at 3 years ago. The experience of emigrants in recent years has encouraged them to look for ways to invest long-accumulated money.
“Bitcoins and cryptocurrencies, which heavily dropped over the year, are drawing attention to themselves. For most buyers, they are an investment, but they admit that they are at risk when buying bitcoins. The investors see bitcoin as part of a long-term investment strategy – they acquire it because they are determined to wait patiently until the rate of cryptocurrencies starts coming back to its heights,” says Magdalena Gołębiewska, Head of the cryptocurrencies trading platform Luno in the Eastern European region. According to her, most of Luno’s clients from Lithuania see bitcoin as an investment tool and a modern asset class that helps diversify the investment portfolio.
Bitcoins are also favored because traditional bank transfers from Great Britain to Lithuania seem to be expensive for some of the population, and it is unclear whether the cost of transfers will not go up during further Brexit processes. In turn, the bitcoin path from one user’s virtual wallet to another is much faster than interbank transfers – journey of cryptocurrencies is cheap and independent from the banks.
“Cryptocurrency differs from traditional currencies by being virtual and independent from any particular state. Bitcoins are finite, and the rate of cryptocurrency is corrected by internal market processes and not by external political decisions. I think that in the long run, this will reveal a greater advantage of cryptocurrencies,” says M. Gołębiewska. Nonetheless, Luno’s leader in the Eastern European region notes that cryptocurrencies are a relatively risky investment, so at this point clients are advised to invest only such an amount that would not harm their or their family’s financial situation.
This year a study by Luno has shown that cryptocurrencies mostly interest venturesome people, who like basketball and are particularly active in poker, casino and other gambling sites. “Maybe these people see bitcoin as a lottery ticket? The difference is that Bitcoins do not have a gambling circulation – the rate of cryptocurrency can be checked continuously and sold after a year or five,” explains Gołębiewska. “So, when making a Christmas gift list, one can decide what’s best – cheap pound or cheaper bitcoins.” She adds that Luno’s customers have every opportunity to exploit the potential of cryptocurrencies as a means of payment. According to M. Gołębiewska, every payment by bitcoin or other cryptocurrency increases the circulation of virtual money and strengthens market confidence.