Crypto Fiat by Governments Will Be the Next Biggest Global Battleground with China in the Lead
In a recent post titled, “Bitcoin is a hedge against the cashless society,” authors Su Zhu, CEO/CIO at Three Arrows Capital (FX Hedge Fund) and Hasu, an Independent cryptocurrency researcher talk about countries going for a cashless society and the role Bitcoin play here.
Talking about digital payments viz. Paypal and international bank transfers, they are cheaper, faster and efficient but they don’t remove “every need for cash.” The unique property of cash that is peer-to-peer exchange without middlemen are not met by these digital payments.
Bitcoin as a Hedge against Cashless Society
Different countries are already pushing for a cashless society either as a tool of social control like China, state the authors or like the central banks in Europe that are “enthralled by the idea of negative interest rates.”
Traditionally, it has been impossible to come up with an alternative solution as the state is usually quick to “shut down all attempts” of monies that gives fiat currency a competition. However, the decade old, Bitcoin could change that.
“Decentralized and digital in nature, it no longer has the central point of failure that made previous “private monies” vulnerable. And it is modeled to marry the two forms of money – physical cash and digital payments – into an entirely new breed: digital cash.”
The authors note that “We are still early into the Bitcoin-experiment” but with cashless society looming, we need to succeed more than ever.
“Bitcoin is a hedge against the demonetization of cash and the rise of the cashless society.”
But Govt. could have Another Alternative: Crypto Fiat
However, according to Ari Paul, CIO of cryptocurrency hedge fund BlockTower Capital, crypto fiat by governments will be the biggest battleground as he took to Twitter to explain in detail,
As for why, “Governments have a powerful incentive to require exclusive usage of crypto fiat. It makes tax enforcement easy, lets governments ‘turn off' the money of criminals and political dissidents, and central banks love it for the real-time transparency and tighter monetary control.”
He expects China to be first to roll out crypto fiat among others who would quickly thereafter “ban anything that competes with it: cash, non-crypto fiat, and if they enjoy significant usage, gold and public cryptocurrencies like Bitcoin.”
He further argues the point that most money is already electronic and going from electronic Yuan to crypto Yuan is “pretty easy technologically but gives the government an entirely different level of transparency and control.”
“Imagine if an algorithm or bureaucrat could easily ‘turn off' the money of 100,000 citizens with social media links to political dissidents. Not only would their money be frozen, but no one would be able to give them money. They'd be functionally cut off from society,” stated Paul as the effect it could have.