If you can’t beat them, join them. This is more than likely the mindset that central banking agencies around the world currently hold. When looking back not even 5 years ago, many big banks and top CEOs showed little interest or confidence in adapting cryptocurrency into modern society. In the year 2013, China actually banned the use of Bitcoin, and Paul Krugman, one of the world’s most famous economists, wrote an op-ed with the title, “Bitcoin is evil.” But these are just some of the exceptions because the truth is that there are many other countries adopting cryptocurrency.
But since then, it appears that the faith in digital currency has significantly increased. Some countries adopting cryptocurrency, meaning those ones that have already implemented a digital currency system include Ecuador, China, Senegal, Singapore, Tunisia. And countries like Estonia, Japan, Palestine, Russia, and Sweden are currently looking into launching their own national cryptocurrencies.
Recently, the Federal Reserve Bank of Boston, announced that it would be teaming up with MIT to thoroughly research digital currency. And this definitely isn’t the only sign of governments and central banking agencies showing interest in the topic.
In a survey done by the Bank for International Settlements (BIS), findings show that a large amount, one could even use the term “most” of developed economies around the world today are considering the implementation of digital currency, this just translates into new and more countries adopting cryptocurrency. Another huge example is the fact that the Bank of England recently released a discussion paper introducing digital pound sterling. Their idea is that it could help the UK’s economy benefit from negative interest rates, according to Andy Haldane, the bank’s chief economist. So with an increase in interest in national digital currencies by central banking agencies, what does the future of digital currency look like?
With centralized government-controlled virtual currency defeating the purpose of decentralized cryptocurrency entirely, the future could appear to be grim. That is of course unless one considers why decentralized currency began to take hold in the first place.
The top dogs like Bitcoin, Ethereum, and Monero have some pretty important advantages. One of those advantages is that all transactions carried out are essentially permanent and immutable. In a centralized banking system, when a person holds money in a bank account, that bank could theoretically expropriate the money from its user and claim that it never existed. But with BTC, ETH, and Monero, expropriating money is virtually impossible. This is due to the fact that no central authority is allowed to edit the recorded transactions on the crypto database. It’s because of this unique characteristic that Bitcoin has been dubbed “trustless”, as-in it doesn’t require any trust to be held in financial institutions. And many supporters of bitcoins, have little of that trust, to begin with.
The second advantage of decentralized cryptocurrencies is that they are much less vulnerable to hyperinflation crises, like what happened with Venezuela, Weimar Germany or Zimbabwe. This is because, unlike federal reserves, there is a limited amount of supply, making it impossible for central power figures to issue it in quantities that would devalue it.
And last but certainly not least, is the anonymity that comes with Bitcoin and the recently popular Monero. With these cryptocurrencies, users don’t have to worry about the strict and sometimes discriminatory “know your customer” regulations that banks use today. Many banks refute this argument with the idea that anonymity creates a crime frenzy. But not everyone agrees with this. According to Jeremy Epstein, CEO of Never Stop Marketing, anonymity is something that should be welcomed, not feared. Epstein says, “Criminals will tend to use this innovation, but I don’t want us to “throw the baby out with the bathwater.” Law enforcement, regulatory agencies, and governments are going to have to adapt to this new environment. It will be challenging. Still, the pros far outweigh the cons, in terms of things like individual freedoms, personal liberty, and privacy. Plus, safety from manipulation and control by “big data” driven corporations.”
It appears that cryptocurrencies like Bitcoin and Ethereum will continue to be the best option when it comes down to the question of who will win the “centralized vs decentralized” digital currency battle. In the end, Bitcoin is an investment that has hugely benefitted many people around the world, and it’s not just a flimsy virtual currency. Odds are, national cryptocurrencies won’t be able to provide buyers with the same opportunities for growth and freedom that decentralized cryptocurrencies have, so we just see advantages when it comes to countries adopting cryptocurrency and decentralized systems.