Cryptocurrencies may have gained mainstream attention even reaching its apex in 2017. Bitcoin was able to reach almost $20,000 mid-December. However, series of regulatory changes made over the past month depreciated Bitcoin’s value by more than half. Is the world really not yet ready for blockchain technology adoption?
If you will ask IMF boss Christine Lagarde, she has different thoughts about the subject matter. And because of this, Bitcoin’s price received a boost an unexpected boost.
Lagarde wrote in her blog that cryptocurrencies such as Bitcoin has the potential to enable fast and inexpensive transactions. In addition to this, blockchain technology could make financial markets safer. And right after this post, Bitcoin’s price spiked back above $8,000. However, it is still unclear regardless if the boost was actually from the news or not.
She wrote on her blog: “Just as a few technologies that emerged from the dot-com era have transformed our lives, the crypto assets that survive could have a significant impact on how we save, invest, and pay our bills”.
She reiterated the comments that she made to the Bank of England last year when she called for an even-handed approach when it comes to regulating cryptocurrencies. She hopes that this could minimize the risks involved in investing in crypto assets. She mentioned that “Before crypto-assets can transform financial activity in a meaningful and lasting way, they must earn the confidence and support of consumers and authorities”.
She added that “an important initial step will be to reach a consensus within the global regulatory community on the role crypto-assets should play. Because crypto assets know no boundaries, international cooperation will be essential.”
Balanced Approach to Crypto
But of course, she also has her hesitations when it comes to cryptocurrencies. She explained in a blog post entitled “Addressing the dark side of the crypto world” that the there is a possibility of “peril that comes along with the promise”. And it is because of the decentralized and the semi-anonymous nature of digital currencies.
Lagarde Swaying on Bitcoin
Over the years, Lagarde has been more accepting of Bitcoin. Her stance evolved from reassuring banks that they shouldn’t worry about blockchain and Bitcoin to associating the market with fraud and with anti-money laundering activity, and finally to warning institutions that the tech could actually be a disrupter of banks.
She suggests that with thousands of cryptocurrencies out there, there is still a lot of froth. And she mentioned that a lot “will not survive the process of creative destruction”. And this seems logical considering the reality that there are only a few ones that really have potential use.
Is she correct after all when it comes to her idea about distributed ledger technology that could help the banks to become more efficient when it comes to their transactions? And today, Ripple and Santander are already ahead of everyone else in proving this point. Could Lagarde actually be right regarding her foresight when it comes to cryptocurrencies? Could it really be useful especially in the coming years as blockchain adoption becomes more prevalent.