Mario Draghi courtesy of Business Insider
Mario Draghi, president of the European Central Bank (ECB) stated Monday at the Economic Affairs and Monetary Committee that they have no power to regulate Bitcoin and other cryptocurrencies.
As many know Jamie Dimon, JP Morgan CEO, has came out hard against Bitcoin and other digital currencies recently. Going as far as to call Bitcoin a fraud. Big banks are afraid of losing out on billions of dollar of transactions they normally handle.
Draghi's comments in response to what the ECB's position on digital currencies is a grim reality many banks will be facing in the near future:
"It would actually not be in our powers to prohibit and regulate."
The statement made by Draghi should be archived for the day cryptocurreny has been widely adopted and we can look back upon it, and say Draghi was right.
Draghi spoke upon that the ECB has yet to discuss and analyze the potential effects cryptocurrency will have on economies, as he added,
"We have to ask what effects cryptocurrencies have on the economy."
Draghi made a good point here, instead of taking Jamie Dimon's stance on it, Draghi is trying to see which ways it can effect economies. There's obviously positives and negatives to this. Money is much more fluid and divisible as a cryptocurrency, enabling people to send money around the globe in a matter of seconds. Though a harsh reality governments are facing is keeping track of how much money people own and how much they should be taxed.
The IRS went after Coinbase recently, trying to find out who the wallet owners were on Coinbase who had transcactions over $20,000. This is due to the fact that only 802 people filed capital gains/losses on Bitcoin in 2015. Uncle Sam wants his tax dollars and cryptocurrency has made it a hell of a lot harder to get them.
The snowball effect is taking place as more people hear about Bitcoin and other cryptocurrencies. Every day a new person is hearing about it and sharing it with another person. With the internet, the adoption and spread of information is so much faster we see technology disrupt industries faster and faster than before.
Cryptocurrency is the snowball and new people are jumping ship everyday as they realize the benefits to it.
When the internet became a thing for the public in 1994, there was no medium like the internet to spread information about it. You heard about it through word of mouth, newspaper, radio, and television.
Adoption of new technology gets faster every time, as noted in the photo above. Does this mean that people will simply ditch fiat tomorrow? No, but cryptocurrency will become a place for people to store part of their wealth in this new digital asset class. It will present a much more frictionless way to purchase items whether in person or on the internet.
Over the next decade into the 2020's we will see cryptocurrency become an integral part of our lives. Certain societies might shun it, but that will only put them behind as the rest of world adapts newer technology.
How do you think governments will approach this? We've seen China come out and put a freeze on Bitcoin trading and other digital assets including Initial Coin Offerings. Governments are going to lose track of money, the one thing that keeps them alive. Comment below what you guys foresee of the future of cryptocurrency.
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Disclaimer: This is not investment advice, always do your own research. It is very important to do your own analysis before making any investment based on your own personal circumstances.