The idea of a government-issued cryptocurrency has been floating around for a while now. IMF Chief Christine Lagarde even posited there might be a demand as recently as last week. Venezuela has gone ahead and launched its own digital currency. As novel as it sounds, it turns out that idea does not sit very well with many Britons.
A survey that started as early shows that an overwhelming 60% of the population will reject such a move.
A government crypto would be dead on arrival, it seems. But why? Wouldn’t it make things a lot easier, cheaper, faster and efficient? Isn’t that the grand vision behind the cryptocurrencies?
Against the Grain
As surprising as it might sound, we didn’t really expect people especially crypto enthusiasts to support such a move. That’s because partly, there’s a philosophical thinking behind cryptocurrencies especially Bitcoin.
Diehards are not just buying it in anticipation of huge profits. They do it mainly because they want free markets and a host of other things. On the extreme end, we have people who want minimal government intervention in their affairs.
Of course, we are not suggesting this is the case with this poll but we are seeing why the idea of an official crypto in itself might go against the grain in the first place.
For privacy advocates, it heightens concerns about increased surveillance. For a government-issued currently will inherently come with trackers, constantly following your transactions and your activity.
The very idea of bitcoin and a host of other digital currencies is that no one should have control over them. The very essence of bitcoin is decentralisation.
On the flipside, it can be the perfect tool to monitor criminal activity and nab the bad guys in their act.
The Other Side of the Coin
But what if all transactions could be connected back to the source? Wouldn’t we erase such vices as money laundering and terrorism financing?
What about eliminating “bloodsucking” intermediaries like banks. Instead, we will have to deal with a central bank which provides some level of security. With banks out of the question, we could even entertain the idea of a negative interest rate which is now difficult.
A centralised currency can give the government much more room to stimulate growth and do good without being encumbered by banks. The recent economic crisis in 2008 would be a case in point.
Devil in the Details
But the devil is in the details. There is no guarantee, as has been proven time and time again that the system will not be abused. There will always be an overreach by those in authority. That is how an otherwise good idea often dies.
Watching Our Back
A level of privacy is necessary to exercise our civil rights. Centralisation of digital currencies can increase the iron grip of government even further.
At the end of the day, we want to spend our money without anyone watching over us and using it against us. Decentralisation promises to guard against this and give us a higher level of freedom.
The last thing we want is an authoritarian government laying its hand on such a powerful tool. Venezuela is already running away with it. China and Russia are mulling about official digital currencies.
Some form of compromise has to be reached, however. After all, with the hyper-connected world, our movements are always being watched. We leave tracks everywhere on our Facebook, Twitter and email use. With things like credit cards which we are ever being coaxed to use, it is always easy for those in authority to connect the dots back.
A government issued cryptocurrency obviously has its advantages, like being backed by the central bank. Investors will not have to worry about their money disappearing into thin air and being left with no recourse.
Of course, within it, it would carry the need to control, which has both its good and bad side.
Centralised Currency Unpopular
The survey reveals that one-third of the people would be “more likely” to invest in a government regulated cryptocurrency. An overwhelming number of the population already know about Bitcoin at 93%. Ethereum is the second most known cryptocurrency the survey indicates.
But the study also shows that 61% of those surveyed think the market will decline or fizzle out completely in the next six months. Could the current downward trend be influencing this view? Most likely?
But different figures have also been pouring water on the nascent sector. BoE governor Mark Carney said it was neither a store of value nor a medium of exchange.
A task force is already in place to regulate cryptocurrencies and we are likely to see its results by the end of the year. What if governments push out bitcoin and put in place their own digital currency?
The idea of a digital currency has always been around. Governments have however been dragging their feet despite the obvious advantages.
The rise and rise of bitcoin and other cryptocurrencies has however jolted them to action. Whether the interest should arise from the need to control or from the prospect of more efficiency is an interesting debate to have.