Is it good or bad for Bitcoin if Governments and Banks unveiled their Own Digital Currencies?

When Satoshi Nakamoto, the mysterious inventor of Bitcoin, wrote in 2008 a white paper on implementing a decentralized digital currency, it must have been obvious that this technology would have an uphill task in convincing not only the general public, but also regulators and policy makers, that it was a viable idea.

This makes sense especially bearing in mind that it was a technology that would pull the rug from under the feet of many longtime powerful entities.

Fast forward to 2016, nearly everyone believes Bitcoin, at least, the Blockchain on which it runs, deserves to be given a chance. That is not to say the journey has been an easy one. Nor should it be lost to anyone that Bitcoin is still fighting for its survival.

It only means that more and more users are trying it. Besides, investors and regulators are waking up to the realization that Bitcoin cannot just be ignored.

As a result, venture capital is flowing into Bitcoin startups. And the idea that we will be seeing many billion dollar worth Bitcoin companies in a matter of a few years does not sound crazy anymore.

 

Everyone wants a piece of the pie

Even more importantly, mainstream companies including major financial institutions like JPMorgan and Barclays Bank are beyond taking note.

They have partnered with Bitcoin startups, formed consortiums and invested in blockchain companies to build their own Blockchain solutions.

National governments seem not to be left behind. The government of Tunisia has been reported to have the ball rolling towards creating the first national currency on the blockchain.

The People’s Bank of China (PBoC), the Chinese central bank, has also announced plans in place to develop a digital currency for the world’s second largest economy.

Meanwhile, the UK Government Office for Science has urged the British government to study the blockchain and see what can be achieved out of it for the benefit of the citizenry. Of course, this could easily extend to having UK’s national currency on the blockchain.

 

Blockchain is good, Bitcoin is bad

With all these private Blockchain projects in different countries and by different entities, it is only a matter of a few decades before the world is reliant on the blockchain for everything from finance to public administration.

However, the question then becomes whether this is good or bad for Bitcoin and other decentralized cryptocurrencies.

Indeed, most of those praising the blockchain technology are predicting the demise of Bitcoin. For instance, while addressing the Fortune Forum in November 2015, JPMorgan CEO Jamie Dimon said that governments are around the world would not sit by and watch Bitcoin taking over.

“It just not gonna happen. You are wasting your time”, he said when asked about the prospects of Bitcoin. He repeated the same message at the 2016 World Economic Forum in Davos, Switzerland, while at the same time applauding the Blockchain.

Such contradictory messages from banking establishment about the Bitcoin technology make blockchain solutions by governments and financial institutions seem bad news to bitcoin.

 

Coexistence is highly likely though

But it is also important to consider that the, so called, private blockchains can coexist with the Bitcoin’s public blockchain. One person who thinks so is Glen Hutchins, a businessman who has invested in several business ventures.

During a Brooking’s Institution ‘Roundtable discussion’ on the Blockchain technology in January 2016, he said that “a private ledger is equivalent to the intranet, which will be great for organization’s back office use.”

Going by his thinking then, the Bitcoin network will be the equivalent to the internet. Different private blockchains will connect to and communicate through it. The Bitcoin network and private blockchains are thus not going to serve really the same purpose, but they will be interdependent.

In turn, that means that private blockchain solutions by financial institutions and national governments might not be bad news for Bitcoin.

By | 2017-04-19T00:21:47+10:00 March 3rd, 2016|Bitcoin, Global Bitcoin News|0 Comments