Friday, 22 December 2017 10:25

Do Bitcoin and Digital Currency Have a Future?


Blockchain technology has a brighter future than most digital currencies in general and Bitcoin in particular. It’s also clear that a discussion of this subject can reach far beyond the confines of the original question, involving in a debate about central banking systems.

Supporters of the notion of digital currencies point out that “Digital currency is here to stay, simply because it does not require middle men or local regulatory bodies to hinder its transnational efficiency.” Also, “Bitcoins are useful for trading currencies internationally … seamlessly in real time—something current banks lack …” According to Kueth Duany, they are “proving to be another interesting asset class to store value…”

Jerry Hurlihy suggested a specific use of the asset class when he observed that a possible use of Bitcoin could be “hedge funds betting on sovereign debt defaults.” Charles Sabatier III added that Bitcoin is the most secure financial network in the world. “The infrastructure that processes transactions is globally distributed and not prone to attack.” He goes on to suggest that it is likely that a nation that is recovering from terrible leadership will decide to adopt a cryptocurrency instead of relying on a central banking system.” This might appeal to respondents like Shann Turnbull, who commented central banking is but a specialized form of central planning. “A change from the current insane, superstitious, or religious belief in official money may occur sooner than expected.”

Xingang, on the other hand, worried that digital currencies are instruments that are “not yet properly regulated, meaning (they) could be used for market manipulation (and) used as payment method for online crime.” Bitcoin does not have a future as a currency, Turnbull said, because of the cost of operating sufficient computers to collectively document every single transaction. “When (digital) mining becomes too expensive the system will freeze up.” David Wittenburg, from his vantage point as a “former numismatist,” suggested that such currencies “arise in times of need (e.g., tokens when official currency is scarce) and they disappear when government offers a better alternative.”

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