The increasing irruption of cryptocurrencies in financial spaces around the planet has captured the interest of many governments, causing some nervousness at times. A few days ago central bankers gathered at the Money 20/20 conference in Amsterdam, where they discussed the question of whether the crypts could end up displacing the traditional money entirely.
At the meeting, which took place on June 5, four main central banks participated in a panel where they evaluated the supposed threat embodied in cryptocurrencies with respect to the current monetary system.
By putting the matter on the table, representatives of the Bank of Canada, the Swiss National Bank, the Bank of England and the Bank of Lithuania came to the conclusion that the cryptocurrencies of private issue, such as Bitcoin and Ethereum, do not really represent a threat for today's fiat currencies.
The board member of the Swiss National Bank, Thomas Moser, said that "from a central point of view, the Swiss National Bank is neutral with respect to private cryptocurrencies. We are not worried about competing with the Swiss franc. "
Odds seem to continue to favor fiat money, but the push and spread that cryptocurrencies have gained worldwide can not continue to be ignored, especially after a brief look at history.
The two oldest existing currencies are the pound sterling (1694) and the United States dollar (1792). Before its use was implemented, precious metals fulfilled the widely accepted role of currency. One British pound was originally equivalent to one pound sterling silver troy, and one US dollar was linked to 24.6 grams of gold.
The change towards the use of paper notes as a means of payment, the current bank notes, had its beginning in the private sector. The goldsmith bankers of London were the ones who began distributing receipts that had to be paid to the bearer. This mechanism reached such popularity that, in a short time, the receipts became money of course to leave officially in England.
On the other side of the Atlantic, a similar story developed. It is believed that Massachusetts Bay settlers were the first to print paper money in the United States in 1690. Soldiers commonly used this type of promissory note, such as gold and silver coins. About 100 years later, the US dollar became the official currency of the country.
History tends to repeat itself
The past may not, necessarily, predict the future, but it is customary to use historical data to predict it. What the history of fiduciary money teaches us is that the private sector has been the pioneer in the past, and that governments, in due time, follow the same path.
Blockchain means trust. The importance gained by Bitcoin is proof of the diminishing confidence in governments. Cryptocurrencies continue to garner immense support among innovators, investors and entrepreneurs around the world, putting increasing pressure on central banks.
The facts indicate that, to the declaration of the central banks gathered in the Money 20/20 conference where they say "cryptocurrencies are not a real threat" for fiat money, the word "still" should be prefixed.
Trust is a prerequisite for a currency to prevail, and, although it certainly bothers the precursors of the "decentralization of everything," large-scale trust has seldom been found outside a centralized authority. What will be the equilibrium point and when will we reach it remain the most difficult questions to answer.