Crypto will take over the world - and central banks can no longer ignore Bitcoin
In 2018, things in the news did not seem to add up with regard to cryptocurrency and the crypto community remained in murky waters in terms of the growth of cryptocurrency and its ability to be used around the world to purchase goods day to day.
2019 has seen some clarity as countries and companies are beginning to make the move away from paper money. We are seeing the beginnings of trading with cryptocurrency and exchanging digital money for purchasing coffee and to even buy real estate. This shift is expected to continue growing as the year progresses, and it will be interesting to observe where cryptocurrency is at by the end of 2019.
Of course, the world's central banks have not allowed this to pass by unnoticed. The central banks have noticed this shift and are taking into account the negative impact that this will have on their business.
The central banks will have to consider issuing their own digital currency, an idea which is supported by the Bank for International Settlements (BIS) who stated in a quarterly report that, “Whether or not a central bank should provide a digital alternative to cash is most pressing in countries, such as Sweden, where cash usage is rapidly declining. But all central banks may eventually have to decide whether issuing retail or wholesale CBCCs makes sense in their own context.”
Bitcoin has only been on the market for the past decade and began as a taboo concept that few people were willing to invest in and has transformed into a household name.
Mark Carney, of the Bank of England, has made a statement suggesting that cryptocurrencies will revolutionize finances and with bitcoin and others gaining in popularity as payment systems go mobile and investors pour in money, Mark Carney's theory may well become a reality.
The Dutch central bank has already developed its own cryptocurrency for internal use and the US has also made their interest known; however, they are more hesitant to begin trading in cryptocurrency because of the policy issues surrounding cyber-attacks, privacy, and counterfeiting.
Potential economic, financial, and monetary policy repercussions need to be taken into consideration along with the policy issues which may take some time, but the central banks will definitely need to take a step in one direction or another as cryptocurrency grows.