The world might soon have an international cryptocurrency in response to Bitcoin, the Wall Street Journal has confirmed. This is a response to the International Monetary Fund (IMF), who has been encouraging banks and governments not to short-change Bitcoin and other cryptocurrencies.
This news has divided those in the know, with many arguing that we simply do not need this currency from the IMF, as Bitcoin already exists. They believe that a globalised digital currency, whilst it would provide decentralised security, would require the IMF to fix and regulate the values in order to manage the flow of money in and out of different countries. The news of this cryptocurrency should come as no surprise really, after the Dubai government released plans to issue their own state cryptocurrency. It has also been suggested that a large number of banks are anonymously supporting state-issued coins. This proves that the Blockchain hype is not going anywhere, and more and more governments are becoming open to the idea of their own state cryptocurrency.
Having a global digital currency does come with concerns and difficulties. The main problem is the centralisation factor. Bitcoin comes with a lot of appeal, thanks to the decentralised protocol, which creates a completely free market, where the value is based only on the consensus without all of the price fixing. Like we mentioned before, a globalised cryptocurrency would provide a decentralised security; however, it would require the IMF to fix and regulate the values in order to manage the flow of money. It is worth remembering that this is contrary to the underlying principles that are behind Bitcoin.
So, what does this mean for the dollar?
The dollar is the reserve currency for much of the world’s transactional volume, and this means that there are some major global economies that want a new digital currency to function as the reserve instead. The International Monetary Fund, could actually easily replace the dollar, if this way of thinking becomes widely accepted. This would then mean that the dollar and other national currencies would be restricted to the local markets. Again, like we mentioned before this decision has split the opinions of experts. Some supporter would argue that we simply do not have any need for this proposed new currency, when Bitcoin is already as popular as it is, and there are no centralisation risks. It is worth noting though that perhaps one of the greatest hurdles would be Lagarde, and other economists who are embracing the use of Bitcoin globally. It still has left the experts very much divided.
References And Further Reading:
- The CoinTelegraph; IMF Could Issue International Cryptocurrency to Replace Dollar?
- Steemit; When will Cryptocurrency Replace the Dollar? Bitcoin, Ethereum, Ripple…Any Of Them.
- Financial Times; The Consequences of allowing a cryptocurrency takeover, or trying to head one off.
- Trading.co.uk; IMF Could Issue International Cryptocurrency to Replace Dollar?