Naeem Aslam, Contributor to Forbes has looked to history in an attempt to answer the question, will cryptocurrency ever replace fiat as the standard currency, reports Forbes.
At the recent Money 20/20 Conference held this month in Amsterdam, the panel discussions between major banks’ representatives were all of the opinions that wouldn’t be the case. During a panel discussion, representatives from Swiss National Bank, the Bank of Lithuania, the Bank of England, and the Bank of Canada took turns in expressing their views on the topic.
The responses were generally in agreement, with Bank of Canada’s James Chapman suggesting that this situation would only occur in a hyperinflation scenario, with Swiss National Bank’s Thomas Moser concurring that a poor fiat performance may well invite more cryptocurrency activity, but argued that “as long as central banks do a good job, there is no real for central banks to disappear”.
This discussion was the first of its kind where major financial institutions were able to address a specific question that is on many private and commercial investors’ minds. Aslam suggests that you only need to look into history to find the answer. He uses the UK pound established in 1694 and the US Dollar created in 1792 as cases in point, both currencies originally only available as precious metals, a troy pound of sterling silver constituting a pound, and 24.75 grains of gold creating a US dollar.
Aslam observes that in the UK, the process of paper replacing gold was actually created by the private sector, with London goldsmiths furnishing receipts for payment, which of course later became the banknotes that are now traditional currency.
Across the Atlantic, The Massachusetts Bay Colony were the first to print paper money in the U.S. in 1690. As a type of IOU soldiers spent or traded them just like gold and silver coins. About 100 years later, the United States dollar became the country’s standard unit of money.
Due to reports of the decreasing trust in government, and specifically, banks after the last economic crisis, coupled with an increasing number of the population turning to alternative forms of electronic payment, such as cryptocurrencies like Bitcoin could be a portent for the future, especially when one looks at the evolution of cash.
Given the private sector was originally responsible for giving life to the current financial system, so it is possible that history is repeating itself with slow the encroachment on fiat by global cryptocurrency adoption, created by a private individual for global use.
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