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The opinion of the banker: what is the weakness of bitcoin and cryptoeconomy
Material posted: Publication date: 24-09-2017
Bitcoin and other currencies will not see the money market and, therefore, not to win a serious place among the currencies of the world, not become the main currency accumulation and trafficking in any country.

Cryptocurrencies do not yet have serious prospects to get a significant share in cash or savings. I immediately, it absolutely does not mean that they will not continue to rise. Here to make predictions I do not presume, as of today the prices scriptactive manage emotions.

Start with platitudes. By itself, the bitcoin, the ancestor of all cryptocurrency's greatest invention, whose role for many more years to be assessed. I am sure that until we see all the possibilities that brings this wonderful algorithm and others built on his idea.

The main advantage of bitcoin is the ability to operate without a Central Bank. Regular (Fiat) currency are accounts in the Central Bank, and all information about crypto currencies are stored in a thousand banks at once and none of them have the ability to do something at will: to issue new money, confiscate money from the counterparty of unauthorized transfer or not to transfer money between accounts. Everything happens according to the algorithm, the accuracy of which watches at the same time has a thousand eyes. In fact, realizing that wishing on bitcoin may be many, but the number of bitcoins is strictly limited by the algorithm, and people buy this "rare", expecting further growth.

But now let's talk about the weakness of bitcoin in monetary terms. The weakness in the same, and his power is in the lack of ability sharply to issue additional money. In order to assess the possible consequences of shift from conventional money to cryptogenic, you need to compare the Great depression and the Great recession in the United States. The crisis of 1929 did not heal, in fact, until the Second world war claimed tens of millions of lives. But the crisis of 2008, which by its premise was much more dangerous, not actually brought to the world of big trouble on an historical scale. The reason is simple: this time did not exist of the gold standard, and Central banks around the world injected in the global economy a huge amount of new money that extinguished the fire of bad debts.

Debts. They will be the main obstacle to cryptocurrency for world domination. No debt/credit, there is no way to divide the capital into high-risk (equity) and low risk (bonds). That is not whether the economy of credit, the bulk of the population who has no idea about the risks, just could accumulate funds with low risk. The world would become a cycle of fraud.

In every economy most trusted borrower is the state. Then banks whose liabilities on deposits with the state again and ensures. Why we perceive the government as trustworthy borrower? The answer is simple: the state has a monopoly to issue money and they can always just print to pay off debts in the national currency.

If the opportunity would disappear in a kind of transition for the cryptocurrency, the reliability of the state as the borrower would stand under the big question. The state would not be able to guarantee deposits in banks. Banks are unable to lend. People would be doomed to issue loans only to each other. But if bitcoins will never be more then easy to understand that return with interest loans in bitcoins will be a few. And now no one except the fraudsters, will not dare to borrow in that currency.

Deprived of the debt market cryptocurrencies may not have linkage between the money supply and monetary base. Issuing loans, banks make relatively small amounts of cash and non-cash allocated to them for circulation by the Central Bank in a giant non-cash funds in the accounts of their clients. This lever increases in volumes of traditional money and pleases one the ability to earn interest, and others to consume and develop a loan. Without that sometimes the state is not saved participants of this feast from bad debts, pumping up the system with new money, such a system may not be sustainable.

Governments of different countries crypto currencies tend to like their adaptability, they are a symbol of progress of human thought. And, despite the problems with money-laundering and the identification of illegal transactions, the trend in public attitudes in General towards cryptocurrencies. What are some of the ICO (initial proposals of scriptaction) that can open unique prospects for the development of stock markets without intermediaries and borders!

So I would hazard a guess that cryptologist and sympathetic to it, the government will intensively think about how to combine the delights of cryptocurrencies and the monopoly of money by the state. And if, at first glance, sole issue of government cryptocurrency — an oxymoron, I think to exclude that would be developed and such a model or algorithm, it is impossible. However, up to this point the cryptocurrency will not see the money market and, therefore, not to win a serious place among the currencies of the world, not become the main currency accumulation and trafficking in any country.


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