I agree with the logic of this article, but I have one question. If enough people willingly ignore the benefits of a centrally controlled currency so they can be “free,” does logic even matter anymore? This article also doesn’t address NFTs which dodge the question of currencies because they are about buying and selling assets, but today “being free” apparently means remaining anonymous which has created a crime wave that should make people stop and think:
“For longer that I’d like to admit, I’ve built expertise within banking- and retail payments infrastructure. Being highly curious about all matters digital, especially within my profession, I’ve added distributed ledger technology, blockchain, tokenization, cryptocurrencies, as well as central bank digital currencies to my areas of subject matter expertise.
So, now that every Tom, Dick, Harry, and sadly, El Salvador, have gotten into cryptocurrencies, and Gucci as well as both Mastercard and Visa enable real-life spending of these, I thought it important to add serious food for thought to those that have, or consider, engaging in the cryptocurrency space.
What is money?
Let’s start with what money actual are: Money is a generally accepted, recognized, and centralized medium of exchange in an economy, used to facilitate transactional trade for goods and services. At the core, and above all, is trust in value of such money – as well as the financial eco-system as a whole. Providing that trust, is the role of central banks. They do this, by ensuring stable prices and low inflation, financial stability, as well as provide safe and efficient payments including issuing so-called Fiat money.
Over time, and for practical reasons, states and governments have enabled the private sector to play a key role in the financial eco-system and today, we have collectively come to entrust commercial banks with our money. Through a vast, regulatory framework, we consider our bank account as a secure storage of our money. We accept and agree that instead of central bank issued cash, we may pay each other via various payment initiation methods such as online bank, cheque, credit and debit cards, Apple Pay, Google Pay, Swish, Twint, Venmo, Vipps, MobilePay, etc.”
[Some of] the trouble with cryptocurrency
Bitcoin might have been envisioned as “A Peer-to-Peer Electronic Cash System” by yet-to-be-identified Satoshi Nakamoto. But the actual use of what we think of as “Bitcoins”, is far from a means of payment, let alone a form of money. Bitcoin and most other cryptocurencies fail on several of the agreed characteristics of money.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
