SPECIAL ARTICLES
consideration?
Andrew
Sheng,
China
Banking
Regulatory Commission’s chief advisor
stated just a few months ago that “Central
banks cannot afford to treat cyber currencies as
toys to play with in a sand box”. Obviously,
Andrew’s statement is a bit of an exaggeration.
The banking sector has given bitcoin and
cryptocurrency some attention, especially
the blockchain technology. However, are
bitcoin and cryptocurrencies a legitimate
threat to the traditional financial transaction
system controlled so tightly by the world’s
central banks? John McAfee, perhaps most
famous for his creation of the McAfee anti-
virus software, has asserted that the “Fed will
disappear”. This seems like an outrageous
claim, but McAfee’s views and opinions are
still valued and respected by a number of
people in the crypto community.
Central banks have enormous power and
control over the circulation of fiat currency.
The daily circulation of fiat currency is
around $5 trillion. The current circulation
in the bitcoin and cryptocurrency market
is nowhere even close to this amount, but
it’s growing rapidly. What banks should
be concerned with most is that there’s a
significant amount of money that’s circulating
without their approval or involvement.
China, along with a number of other
developed countries, has been working
to develop a state-backed cryptocurrency.
Canada has introduced the Rivermont
Crypto Fund. This fund will start by
investing in bitcoin and ethereum and then
gradually expand its investments into other
cryptos, and maybe even a few ICOs. Canada
has also been working on its own version of
cryptocurrency, called MintChip since 2012.
Estonia, a super-technologically advanced
country, has attempted to introduce Estcoin,
its own digital currency. Estonia is a very
internet-friendly country offering numerous
free public wifi-hotspots. The country believes
that free internet should be considered a basic
right of its citizens. European Central Bank
(ECB) President Mario Draghi was quick
to state that no EU member should try to
introduce its own currency. This might be an
example of central banks showing resistance
against digital currencies because they might
perceive them as a threat to their financial
ecosystem.
Russia and Holland have begun to show
interest in blockchain and cryptocurrencies
by launching their own projects. As we
get ready to enter into 2018, it should be
reasonable to assume that more countries and
their governments will try to get involved in
the cryptosphere. The current chair of the
US Federal Reserve, Janet Yellen, has refused
to acknowledge bitcoin or cryptocurrency as
“legal tender”. However, the former chair
of the US Federal Reserve, Ben Bernanke,
remarked that virtual currencies “may hold
long-term promise”. What’s interesting
to note here is that Bernanke made that
statement back in 2013, when bitcoin or
cryptocurrency, in general, did not seem to be
as much of a threat to the global dominance
of central banks.
Omar Faridi
[email protected]
Core Magazine
31