Renowned economist Mohamed El-Erian has said that he sees ”officially sanctioned” cryptocurrencies prominent in the future of government-issued currencies.
As reported by Bitcoinist, El-Erian noted that the ability for government-issued cryptocurrencies to be successful lies in the trends of customers choosing to use cashless payment methods.
“We are moving away from cash. Go to Sweden and you’ll see how fast,” El-Erian said, pointing to the country where 98% of all transactions are conducted without physical cash.
The 2% of cash transactions in Sweden is even suspected to decrease to just 0.5% in 2020, with the US, UK and Canada all predicted for similar trends.
‘Bitcoin’s cost lets it down’
El-Erian has noted in the past that he believed Bitcoin to be overpriced, letting down its ability to be allowed by governments. This does show a degree of ignorance to the fundamentals of how the technology works, however.
The decentralized nature does not present a choice for governments whether the cryptocurrencies will be adopted by citizens; the globally distributed system is made accessible to everybody. Unless the government chooses to sensor areas of the internet, nobody is discriminated against in their ability to use cryptocurrencies.
Is government-backed crypto the answer?
Government-backed cryptocurrencies have the potential to ease a countries economic situation should they be suffering from hyperinflated local fiat currency or other severe economic issues, such as Venezuela did.
It would seem, however, that any government-issued cryptocurrency would have to be viewed fundamentally differently than such a crypto as Bitcoin, which was created with a prime purpose of overturning governmental and banking power over an individual’s finances.
An officially-sanctioned digital currency would be liable to be tracked by the government, and be required to pay taxes on. As this goes fundamentally against the original decentralized blockchain ethos of cryptocurrencies, it makes it difficult to comprehend how government-backed crypto alternatives would be of more value than standard fiat currencies.
While government-backed cryptocurrencies may be beneficial for institutions and companies looking to trade and provide services internationally, individuals seeking the financial autonomy provided by Bitcoin may resent adopting it.
El-Erian’s prediction for governments issuing digital currencies could potentially be made in disdain for Bitcoin’s decentralized ethos and functionality, rather than merely due to cashless trends.
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