The use of metal coins as currency dates back to at least the 7th century B.C. By the 11th century A.D., paper money had been introduced in Song dynasty China. Despite centuries of financial innovation, paper and coin money are still common, familiar technologies to almost everyone.

Could the future, however, belong to digital currencies? Bitcoin and other decentralised cryptocurrencies based on blockchain technology have been around for over a decade now. Facebook is planning its own blockchain digital currency called Libra (though it won’t be decentralised, and is not technically a ”cryptocurrency”). Could these technologies be the future of money?

When we spoke to the former President of the European Central Bank, Mario Draghi, we asked him his opinion on Bitcoin. He told us he would not call Bitcoin a currency for a couple of reasons. One of them was that “a Euro today is a Euro tomorrow. Its value is stable. The value of Bitcoin oscillates wildly”. Isn’t this a big problem for cryptocurrencies like Bitcoin? How can we use them as currency if their value isn’t stable?

To get a response, we spoke to Benjamin Jones, Chief Executive Officer, Chief Technology Officer and Co-Founder of Bitwala, a blockchain banking service headquartered in Berlin, which markets itself as “the world’s first crypto bank account”. What would he say?

I think that’s a very fair criticism. If I could actually go back in time and come up with a terminology for Bitcoin, I probably wouldn’t call it a cryptocurrency, because I also don’t particularly see Bitcoin’s use as a currency. Currently, the valuation is changing on an almost daily basis, which means that if you wanted to go to shops and buy a coffee, you could be paying a vastly different number of Bitcoins or MicroBitcoins from day to day. And, also, you don’t really have people spending it – so, you could make all the arguments about Bitcoin being a currency if there was a large portion of the population actually using it, but that isn’t really the use-case that we see for cryptocurrencies at the moment.

So, in the West especially, you see Bitcoin being treated more as a digital asset, as a digital gold, if you will. Bitcoin was the first digitally-scarce good ever produced; obviously, with digital goods, it’s ultimately just binary data and you could just duplicate the file a million times, and that is a problem if you want to create something of value. With information it wasn’t a problem, so when the internet came along it was fine to be able to reproduce information many times – and, in fact, that’s what the internet does, it distributes it everywhere, and that’s been really great for us. But it doesn’t really work for anything that we want to have value, because if you can duplicate something an infinite number of times, then of course the supply pushes the price down to zero.

So, I would say to Mr Draghi: if you are considering holding Bitcoin, do it not because you want to buy something with it, but because you want to invest in a speculative asset that is representative of a new system that’s evolving. I see the value of Bitcoin as being this flagship of a decentralised movement which is powered by the technological properties and advantages of using the blockchain…

What do our readers think? We had a comment come in from Jonathan, who thinks digital currencies are definitely the future: “This is the 21st century. If I want to pay my taxes in Bitcoin or gold bullion or whatever, why not? It would make the continent so much more dynamic.”

For a reaction, we spoke to German Christian democratic MEP Stefan Berger, a member of the European Parliament’s Committee on Economic and Monetary Affairs. What would he say, particularly in light of Facebook’s proposed new digital currency?

[The fear is that digital currencies like Libra] could be used to launder drug money and black market money. You can, of course, take measures against that, for example, all those who participate in Libra would have to identify themselves through a Know Your Customer process, so everyone with an account has to identify themselves. However, if it’s a global currency, then you have to ask how that process would be enforced [outside of Europe].

There are many, many questions connected to this Libra project that have not yet been solved… be it money laundering or financing of undesirable projects such as terrorism… As long as these questions have not been clarified, I think we should proceed carefully and not allow it in Europe, and continue discussions about this technology for the time-being.

Are cryptocurrencies and digital currencies the future of money? Will they facilitate black markets and terrorism, or are they the logical next step for finance? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

Image Credits: Unsplash – (cc) Dmitry Demidko; Portrait Credits: Stefan Berger – (cc) Foto-AG Melle

20 comments Post a commentcomment

What do YOU think?

  1. avatar

    No. I actually agree with Erdogan that they are made by Satan.

  2. avatar

    No, but you wish it, easy way to implement your dictatorship and to say who lives and who dies.

    • avatar
      Debating Europe

      Hi Alfredo, which dictatorship would that be?

  3. avatar

    No. But world wide people should go back to being paid em cash so that you can decide which bank will charge you a bank charge or paid you na interest for using your Money, or then weather you want or not to use a bank.

  4. avatar

    Hope not…what about the people not usted to digital?

  5. avatar
    EU Reform- Proactive

    Reality check:

    * There are 180 UN-recognized (=legal tender) currencies globally. Called “Fiat money”- controlled by Central Banks.

    * Presently, there seems to be anything of ~3,000+ Crypto Assets (CAs= illegal tender) globally, created by programmers= people & businesses- confusingly referred to as cryptocurrencies and growing yearly.

    • There is an estimated total number of 21 million developers cum programmers in the world. With some financial assistance, they could theoretically create 21 million speculative different Crypto Assets.

    Despite all criticism of the CBs because of QE & QT = manipulating (regulating) the money supply, it still seems the lesser evil and a more financially sound environment than joining the digital geeks and internet fraudsters by entering the territory of highly speculative and risky money-making schemes.

    There are better ways to invest one’s hard-earned Fiat money by staying clear & not enter the hyped-up crypto casinos!

  6. avatar

    No, a lot of people need untraceable cash and they’ll do a lot to keep it this way.

  7. avatar

    No. They are a threat to freedom

  8. avatar

    I think people should be entitled to always have some privacy, we dont have to know all, but paper money can give people some protection from various situacoes. I think digital currencies will work, yet the paper money should continue.
    To evolve we should try to be as diverse as possible, one way of doing that is protecting what we have been able to obtain.

    • avatar

      It can be also considered a form of protection, although it can be used to harm its intend is to protect.

  9. avatar

    The way central banks make money out of the cloud, I think that sooner or later there will be a colapse and bitcoin currency will prevail.

  10. avatar

    I would have thought the ECB would feel threatened by Bitcoin as it is out of its control and a rival monetary system. There is a BitPay card now to make purchases with bitcoin because it just exchanges Bitcoin into different currencies. A person could technically pay their taxes with BitPay online as long as their country is on the approved BitPay list. Bitcoins are unique algorithms that are then divided into bits so I am not sure why Benjamin Jones, Chief Executive Officer, Chief Technology Officer and Co-Founder of Bitwala says that it can be duplicated. Now that BitPay exists and a person can spend their cryptocurrency in the real world, it will increase trade and the economy from sources that didn’t exist before. ‘We the people’ don’t like the ECB and TROIKA conditional loans and why should we be charged interest by banks for money that they create from debt? Humans are just cash cows and bitcoin may be able to set us free. Money laundering, financing of undesirable projects such as terrorism happens with Tax havens like the ones in Switzerland and British Overseas Territories.

  11. avatar
    Mason Larry

    During my stay in Dubai last year,i visited a friend who introduced me to Jamie [UAE Indigene] as a bitcoin expert,we exchanged contacts.Recently some organisation of young guys came into our office to persuade us into investing with them,prolly because of the surge of bitcoin price due to the scarcity of it.i find it hard to monitor because of the codes and numerous numbers involve in it.This takes me back to reaching out to the mining and bitcoin guy who directed me to Blockchaindexterity g -mail address and i got signed up into a plan.All i did was a six month initial investment plan that just added 50BtC to my wallet. With the study and guidance i got,a higher increase of price is inevitable in the nearest future.Trade today for a better tomorrow.

  12. avatar

    Crypto investment has been a real hassle for me, after a failed investment during the pandemic, I decided to take the back seat and focus on increasing my knowledge about bitcoin and the crypto investments.
    After consulting, I got investment networking I could leverage on and my patience and knowledge has paid off greatly.

  13. avatar
    JT HK

    Digital currency without national authority to backup, it is just a scam. Even worse, we don’t know what dark and evil power that might be concealing behind. This is how the US is heading towards decline because it has printed too much money more than its gold reserve. The US economy appears to be upholding by financial speculation more than valuable power and resources. Europe ought to be very careful of destruction of its own industrial, social and financial capacity by following blindly the US sanction. All over the the Eurasia continent, Russia, the Middle East, Middle and Southern Asian developing economies are gathering momentum to emerge. Europe’s destinaion is not the American great again but the survival of Europe in this highly competitive global political economy.

  14. avatar

    No, they are not. And I really hope Europe will never fall for them. Cryptocurrncies are the biggest Ponzi scheme ever created.

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