Renowned Professor of Economics and Political Science, Barry Eichengreen, has declared that he believes decentralised cryptocurrency will “not really” play a part in the future of finance.
For the University of California lecturer, it is far more likely that central bank-issued digital currency will be favoured, thanks to the ability virtual currency has to streamline existing financial services. Meanwhile, the ease with which people can use truly decentralised currencies for illicit activity will fatally hinder their adoption. Speaking to CNBC, Eichengreen stated:
I think there is a role for central bank-issued digital currencies which are a very different thing than crypto, anonymous currencies… The first alternative central bank digital currencies will make transactions more efficient. The second one is a vehicle for money laundering, tax evasion and the like.
Of course, one of the largest draws of true-cryptocurrencies (like Bitcoin and Ether) is their independence from central banks. Many naysayers, such as JP Morgan Chase’s Jamie Dimon, seem to believe that the appeal lies in subverting the law for the purposes of money laundering, drug dealing, or child pornographing. However, this reading is downright offensive to the many crypto-advocates who simply believe that central banking institutions exert too much control over cash flows. Thanks to Bitcoin and other cryptocurrency’s qualities of decentralisation and scarcity, their users are protected against the often questionable decisions of bankers who seem to care about little else than lining their pockets with gold.
For the proponents of cryptocurrencies, the time has come to take back control of global financial systems which are controlled by centralised institutions such as the Federal Reserve in the US. Fractional reserve banking has systematically devalued currencies across the planet and, along with other dubious banking practices, serve as a tool of the elite to control cash, and therefore people. By controlling the system, they allow themselves to reap the benefits with scant regard for the fate of those at the bottom of the economic ladder. Unfortunately, central bank-produced digital currencies like those suggested in Russia and China would simply allow for even greater control. Every dodgy trick in the book would still be available to those who control the nodes running a centralised digital cash system. Meanwhile, they’d also ensure that every incidence of tax aversion could be irrefutably proved. Essentially, rather than providing an avenue to escape oppressive control, the digital currencies which Eichengreen favours would just allow for even less financial liberty from centralised points of failure. This equates to a win-win for those, like Dimon, who have most to fear from true decentralised cryptocurrencies.