The notion that cryptocurrency could only be safe and efficient if handled by the government and being state-backed is not only unhealthy but shaky at best, as it holds little water.
This follows the recent consensus that lately came to the public’s foray at the just concluded Singapore Fintech Festival after Christine Lagarde claimed the most viable solution to eliminate the testy issue of trust and uncertainty that the public has with cryptocurrencies is if digital assets become government-backed instead; in contrast to the open system that is in current practice. Talking about how a blockchain banking system based on digital currencies would hold an advantage over the current system, she opined in her speech, in advocate for state-backed cryptocurrencies:
“. . .Your payment would be immediate, safe, cheap, and potentially semi-anonymous. And central banks would retain a sure footing in payments. In addition, they would offer a more level playing field for competition, and a platform for innovation.”
However, this completely eliminates the fundamentals behind the creation of cryptocurrencies in the first place. While the blockchain technology is obviously superior to the present banking system in terms of transparency and immutability, a state-backed currency would only allow banks to keep close control over all transactions, while eradicating the need for anonymity which unfortunately defeats the purpose behind it all.
Bear Market Bearing the Blames
With the New York Times also wading into the matter in support of Lagarde’s comment and Nouriel Roubini, sharing his lifetime anti-bitcoin mandate on the Guardian, this is absolutely the perfect opportunity for cryptocurrency critics to seize the time to remind the world why the crypto market’s volatility is a testament to an ill-advised industry. The rabid bearish nature of the latter part of this year has seen the crypto market cap in general decline to almost one-fifth of its peak value in 2017.
Founded or Superficial?
Roubini claims the adoption of a national cryptocurrency would in no time displace currencies such as Bitcoin and Ethereum, as he foresees a future of doom and gloom for decentralized cryptocurrencies. Roubini’s view, however, is flawed at best and superficial; as it tries desperately to avoid a number of key components. A poignant reminder of reality to the unpopular Bitcoin critic would be Iran’s latest decision to rush the launch of its state-backed crypto-rial after the United States of America forced Global provider of secure financial messaging services, SWIFT, global provider of secure financial messaging services, to remove the Central Bank of Iran from its financial system. Iran’s resolve to trade with a state-backed digital currency only shows everything there is that is against cryptocurrency ethos.
That the United States Dollar itself has lost value in recent times, and is in a precarious state given there is no explicit control over the number of dollars printed, is no secret. Digital currencies, in contrast, have a limited supply determined by engineered algorithms and are not subject to human manipulation like US’s fiat currency. Roubini might dismiss Bitcoin’s intrinsic value, but the fiat United States Dollar is definitely worse. No question.