Bitcoin was developed in 2008 as a response to the financial crisis. In the last ten years, it has become a disruptor and even alarmed central banks. Now, there are institutional investors that are looking to adopt cryptos. You already have banks that partnered with Ripple in order to make use of xRapid and solve the high cost of cross-border transactions. And also, you now have ICE that even created Bakkt.
And considering the progress that cryptocurrencies attained in the last decade, you can’t help but ask if it is really going to replace money eventually? Will we be seeing a decentralized future wherein you can just make payments using your phone?
The General Manager of Bank for International Settlements (BIS), Agustin Carsten mentioned that Central banks are now looking to conduct reforms in the payment system. According to him, the reforms have more economic value and are unlike Bitcoin. He said that “The use of ‘currencies’ is misleading. Cryptocurrencies, such as Bitcoin, ether, and tether, do not serve the core functions of money”. He criticized the volatility of the cryptocurrencies and even said that “No cryptocurrency is a true unit of account or a payment instrument, and we have seen this year that they are a poor store of value. Buyers of cryptocurrencies are buying into nothing more than a software algorithm”.
He then discussed the value of card payments in the last 16 years. “Globally, the value of card payments reached 25% of GDP in 2016, compared with 14% in 2000, according to the Committee on Payments and Market Infrastructures. Already widespread mobile phone applications are boosting cashless payments”.
Carsten worked as the former governor of Bank of Mexico between 2010 and 2017. He highlighted the infrastructure of Central Banks that are according to him more superior than that of blockchain. He said that “While this work is not as attention-grabbing as crypto-this and crypto-that, developing new hardware, software and process to safeguard money, strengthen financial stability and protect the economy are of immense importance”.
He even urged young crypto-curious people to “stop trying to create money”. Instead, he suggests that they should focus their energies on developing technological advancements that can contribute to the world and not on cryptos that don’t “fulfill any of the…purposes of money”.
As an adamant anti-crypto personality, he called Bitcoin a bubble and a Ponzi scheme. He even called it an environmental disaster in one speech last February at Goethe University’s House of Finance.
Future of Bitcoin
However, despite the criticism thrown at Bitcoin, you can’t remove the fact that it has changed the way we use money. There are even institutional investors that are looking closely at the technology. Bakkt and Fidelity are just some of the best examples of such.
Experts believe that there is a chance that Bitcoin and the crypto market is going to go up in the coming months. In fact, there is a chance that a Bitcoin ETF will be approved by next year. And given this scenario, it is possible that more institutional investors are going to have an easier time when it comes to investing in cryptos.