Cryptocurrency Question Wednesday:
Will a state backed (or sponsored) cryptocurrency be the beginning of the end of all other cryptocurrencies?
For as long as I have been involved in cryptocurrencies, that seems to be the age old question.
All these cryptocurrencies are great, but what happens when a government issues their own virtual currency and demands its citizens pay taxes in said coin?
Governments, technically, wouldn't even have to make all other coins illegal, just require taxes to be paid in their own coin and it likely would receive mass adoption.
The reason I bring this up is because Jordan Belfort (The Wolf of Wall Street), went on the news today stating that he wouldn't touch cryptocurrencies such as Bitcoin because he thinks ultimately a government will issue and back their own coin and at that point it will be game over for Bitcoin etc...
The release can be seen here:
https://www.coindesk.com/wolf-wall-street-jordan-belfort-jamie-dimon-right-bitcoin/
For today, I want to hear from the community, what are your thoughts on this?
From my readings, the main two arguments seem to be as follows:
- A government backed virtual coin would still have the same flaws as fiat money and would also give governments even more control over their citizens than they currently enjoy. The people would never go for this and any government issued coin wouldn't be adopted.
or....
- Governments have the ability to jail or harm anyone that doesn't do what it wants and therefore holds all the trump cards, including getting people to use their own state backed currency. For that reason, a government issued virtual currency will take over if and when it comes.
What side of the fence do you fall on?
Please state below your thoughts on why a Government backed cryptocurrency will or will not catch on.
I won't share my personal thoughts in this post as I don't want to sway any opinions out there. Rest assured, though, I will share them in a later post. :)
Stay informed my friends.
Image Sources:
https://news.bitcoin.com/big-difference-electronic-fiat-cryptocurrency/
http://stuffpoint.com/science-fiction/image/329938/nineteen-eighty-four-screenshot-screenshot/
Follow me: @jrcornel
Thank you,@jrcornel for posting such an important question.
I think that if a government issues its own coin, it will not affect btc. What attracts people to btc and other cryptocurrencies is not that they are digital. We already have digital money with PayPal and credit cards. In best case, it would be something like TUSD.
What makes btc attractive is that it is decentralized, borderless, and wild. We are sick of central banks and governments dictating what we can or can not do with our own money. We are sick of all those middlemen. We want to be in control.
My opinion here is if goverment does issue a fiat cryto and force people to use it. It would only affect citizen of that country and it would be less popular than Bitcoin. Value of a US govt backed cryto would be tied to the US dollar. So it would just be a FED back Tether (USDT). If you see USDT now. It does not grow much and used mostly as hedge when Bitcoins and the altcoins are down.
But I do see a plus if government does adopt a cryto. I think adoption of one cryto would make other crytos popular because we can easily covert 1 to another.
Agreed, great question @jrcornel. I think we will see a lot of oscillation in government policy fueled by governments not wanting to have their banking systems usurped by cryptos, yet also not wanting to lose out on potential economic growth and boom that cryptos may promise. Interesting post from @thehutchreport on how governments may react: https://steemit.com/cryptocurrency/@thehutchreport/cryptocurrencies-the-revolution-will-not-be-televised-it-will-be-steemed
Bravo! Well said!
It's the Wild Wild West law dogs don't go down around here
That's interesting, but what drives the value of a coin is the people using it, and the value of Bitcoin will depend on many factors that for sure do not guarantee its future value.
States can issue a coin that takes advantage of the decentralization (to some or big extend), and borderless. They can have multiple locations running the mining rigs that run and provide the descentralized secuirity across the states, and will allow them to move funds easily from one jurisdiction to another.
Thinking that Bitcoin is bulletproof is very naive. It's current technological hedge can be challenged by many technologies and players, and if something is clear from previous experiences is that technology tends to be rendered obsolete even if had great advantages at some point . (ie from Betamax, to horse transport, four engine planes, electronic valves, etc).
so how to you stabilise price when that value is being decided globally by potentially billions of people? It's actually going to be better for Bitcoin (and the others) long term if we don't all have our eggs in the one basket. A currency that can be so different one day to the next is useless for daily spending.
Hey jrcornel,
Thanks for sharing
A few thoughts...
1.) I wouldn't trust a word out of Jordan's mouth...a la Jamie
2.) I would trust Mr. Gates...
3.) It ultimately depends on unknown factors and events that will take place in the future...
Great video!
Thanks! Helps to keep things in perspective.
'Old money closes at five, new money is always open'
That is some awesome video.
Exactly
Yes, this is true. There is no way longer to see money as we used to, there should be the global changes...
I think it is difficult to track the crypto.
Great article cheers mate
I think a third option similar to option 2 in that yes the government will have the power but still its coin would not take over outwith that country because crypto transcends borders.
For this reason I think that people would pay lip service to this country's coin if they lived within it but it might actually open their eyes to the world of other coins and ultimately might be the end of said government or its coin as people moved into other crypto and used only the government's coin for the transactions that it were necessary for. They would potentially keep their real with in as better coin. If that makes sense
According to my state backed (or sponsored) cryptocurrency will never work. The main feature to cryptocurrency is that its anonymous and cant be tracked. If a government cames out with their own cryptocurrency they want to have power to create more currency with them. They always want to control the monetary policy. The rise in demand to cryptocurrency is increasing as they dont have to disadvantages like this. What government best can to is use the underline technology BLOCKCHAIN to improve government working infrastructure.
Can't be tracked? Isn't it always on the public Ledger. If one were to look?
You don't understand cryptocurrency. You can make it traceable, you can design it with the requirements you may need.
You do understand that Blockchain technology can be used by the states and companies, and doesn't need to be a cryptocurrency.
thanks 4 sharing
I’m in the camp that governments or banks or both have some sort of dog in fight eventually. They aren’t going to sit on the sidelines while these digital currencies compete with their fiat currencies. I think they eventually get in the game, it’s how and when that’s the question. I then believe they use their so called coin to exert complete control of the individual. So mass adoption of said currency would be a problem I think. But who knows. I think we’re a few years out from this happening.
agreed!
they will try everything to get in....
I think that once the crypto currency is supported by the state, its value will fall! People do not want to pay taxes for crypto currency, it will hit the prestige of all the crypto currency. If the government controls the holders of the crypto currency, it will sharply lower the rating of the cryptomir. But on the other hand, not paying attention to the crypto currency will lead to the collapse of the economy as a whole. What do I see solutions to problems? All the Crypto currency is taxed, but very low. And give society absolute freedom of action with its crypto money!