A Few Thoughts on Crypto-Currencies

Crypto-currencies?

Crypto-currencies, are recent digital innovations which could have a major impact on the dynamics of various markets around the world. They could also have a major impact on market dynamics generally.

For example, in a world dominated by fiat currencies, markets are easily influenced and manipulated by the expansion, contraction, and restriction of the dominant medium of exchange (fiat currency).

However, in a world in a world where multiple alternative mediums of exchange exist alongside the various fiat currencies, the ability to manipulate market participants is severely retarded because market participants will have the ability to substitute one medium of exchange for another.

With crypto-currencies this substitution process can take place very quickly. This will pose a problem with regards to the store of value property of money in the future. However it’s hard to say how significant a problem that will be.

The only limiting factor in this regard is the current low number of wallet providers that allow their clients to hold multiple crypto-currencies in addition to the various fiat currencies.

One can easily find a wallet provider that allows clients to hold a medley of Euros, Dollars, Pounds, etc. However, the only crypto-currency on offer is usually Bitcoin.
Will we still need traditional bank accounts?

Indeed, while traditional banks aren’t going anyway any time soon, demand for their services should wane dramatically. This includes demand from commercial interest in addition to personal account holders.

Multi-currency wallet already provide most of the services one would get from a basic current account as well as several others not offered by traditional financial institutions, including the ability to have both physical and virtual payment cards issued in various fiat currencies.

Commercial interest (particularly those not registered in any state) will turn to wallet providers rather than banks for their financial account needs.

Many of the larger commercial organisations will opt to create their own international banking groups based on the ability to keep custody of their own funds in crypto-currency wallets rather in traditional bank accounts.

It’s very difficult to seize the funds in (or block) a crypto-currency account.

Attribution: This content was originally published on the 17th of October, 2016. https://medium.com/@mikehydes/a-thoughts-on-crypto-currencies-89f324e4764e