What is the future of cryptocurrency?
Robert Cryptocurrency has become a global phenomenon in recent years, although much is still to be learned about this evolving technology. There are many concerns and worries swirling around the technology and its capacity to disrupt traditional financial systems.
The truth about trustless systems
Supporters of Bitcoin and other cryptocurrencies claim that these financial platforms are inherently trustless systems - that is, they’re not directly tied to any nation-state, government, or body. They would argue that cryptocurrency is superior to traditional physical currencies because it is not dependent on, for instance, the U.S. federal government. Exchange Bitcoin BTC to Visa/MasterCard USD with bitcoin visa
.
Libra: Not all it’s cracked up to be
Facebook’s contribution to the cryptocurrency world — Libra — has been hyped in some corners as the answer to a variety of financial issues. 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 doesn’t see introducing another cryptocurrency as the right solution for minimizing payment transactions, and he doesn’t agree with Facebook’s attempts to circumvent traditional banking systems entirely.
Is stable coin the answer?
Stable coins have grown in popularity as a way to back a 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 — 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 it’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.
Cryptocurrency’s future outlook is still very much in question. Proponents see the 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.