What Does the Future Hold for Cryptocurrency?

๐ƒ๐ข๐ ๐ข๐ญ๐š๐ฅ ๐ฆ๐จ๐ง๐ž๐ฒ has turned into a worldwide phenomenom lately, albeit a lot is still to be found out about this developing innovation. There are many worries and stresses twirling around the innovation and its ability to disturb conventional monetary frameworks.

Joseph A. Grundfest, teacher at the Stanford Law School, as of late plunked down to talk about how ๐œ๐ซ๐ฒ๐ฉ๐ญ๐จ๐ ๐ซ๐š๐ฉ๐ก๐ข๐œ money is at present being utilized, where slip-ups have been made, and what’s in store for this innovation. As a previous official of the Securities and ๐„๐ฑ๐œ๐ก๐š๐ง๐ ๐ž ๐‚๐จ๐ฆ๐ฆ๐ข๐ฌ๐ฌ๐ข๐จ๐ง and master on monetary frameworks, Professor Grundfest is in a special situation to remark on the eventual fate of ๐๐ข๐ ๐ข๐ญ๐š๐ฅ ๐ฆ๐จ๐ง๐ž๐ฒ.

The truth about trustless systems

Allies of ๐๐ข๐ญ๐œ๐จ๐ข๐งand other digital ๐œ๐ฎ๐ซ๐ซ๐ž๐ง๐œ๐ข๐ž๐ฌ guarantee that these monetary stages are innately trustless frameworks – that is, they’re not straightforwardly attached to any country state, government, or body. They would contend that ๐œ๐ซ๐ฒ๐ฉ๐ญ๐จ๐ ๐ซ๐š๐ฉ๐ก๐ข๐œ ๐ฆ๐จ๐ง๐ž๐ฒ is better than conventional actual monetary standards since it isn’t subject to, for example, the U.S. central government. Grundfest takes note of that whether or not you imagine that is a positive or negative thing, it’s not totally precise. ๐ƒ๐ข๐ ๐ข๐ญ๐š๐ฅ ๐ฆ๐จ๐ง๐ž๐ฒ aren’t exactly trustless by any stretch of the imagination. They are as yet dependent on the hidden framework fueling digital forms of money like Bitcoin, a lot of which is situated in China. The Chinese government could hypothetically make changes to cryptographic forms of money at an essential level by forcing will on the information diggers keep them running.


Libra: Not all itโ€™s cracked up to be

Facebookโ€™s contribution to the ๐œ๐ซ๐ฒ๐ฉ๐ญ๐จ๐œ๐ฎ๐ซ๐ซ๐ž๐ง๐œ๐ฒ world โ€” Libra โ€” has been hyped in some corners as the answer to a variety of ๐Ÿ๐ข๐ง๐š๐ง๐œ๐ข๐š๐ฅ ๐ข๐ฌ๐ฌ๐ฎ๐ž๐ฌ. In particular, the platform was designed to facilitate international payments and eliminate unnecessary transaction costs and fees.

Professor Grundfest concedes that the goal is admirable, but he believes that the approach is deeply flawed. He doesnโ€™t see introducing another ๐œ๐ซ๐ฒ๐ฉ๐ญ๐จ๐œ๐ฎ๐ซ๐ซ๐ž๐ง๐œ๐ฒ as the right solution for minimizing payment transactions, and he doesnโ€™t agree with Facebookโ€™s attempts to circumvent traditional banking systems entirely. Instead, Professor Grundfest argues that a better approach would have been for Facebook to create its own bank that could act as a primary financial institution for its users. The company could have focused on building banking systems customized to each nation or region, addressing regulatory demands and driving down costs. Once those had been established and public trust was built, then it would make sense to simply link each one to create a global network.

Is stable coin the answer?

Stable coins have grown in popularity as a way to back cryptocurrency with assets that hold real value, much in the same way U.S. currency used to be on the gold standard. Those assets could be other currencies or commodities โ€” virtually anything, really.

There are a couple of issues Grundfest has with this approach. For one, it essentially recreates a system that already exists. The other concern is that it could make it easier for people to commit fraud since itโ€™s not as easy to audit and monitor as traditional currencies.

Professor Grundfest closed the webinar covering some of the stronger applications for cryptocurrency. For instance, people living in countries with weak currencies may be better off investing in Bitcoin than buying local stocks and bonds.

Cryptocurrencyโ€™s future outlook is still very much in question. Proponents see limitless potential, while critics see nothing but risk. Professor Grundfest remains a skeptic, but he does concede that there are certain applications where cryptocurrency is a viable solution.

Share: