When people say that Bitcoin can never replace central banks, it’s worth remembering that, in the early part of this decade, as the Eurozone teetered on collapse, many turned to Bitcoin, pushing up its value and giving it a legitimacy that it hadn’t possessed before. To put this another way, when there was blood on the streets, people bought Bitcoin.
Five years on, and Bitcoin is now celebrating its 10th year and gaining legitimacy among those same central banks that everyone was worried about at the time. These banks are coming to terms with the reality that it seems like Bitcoin is here to stay, and they’re increasingly looking at ways to bring it inside the proverbial tent.
Foremost among the central banks is the US Federal Reserve, which still has some privacy worries around cryptocurrencies. However, the latest signs are positive with Randal Quarles, Vic Chair for Supervision at the Fed saying in December that a Fed-owned cryptocurrency “was worth thinking about.”
While the noises coming out of the ECB around cryptocurrencies are negative, nothing could be further from the truth in China. A statement issued by the People’s Bank of China went as far as to say that “conditions are ripe” to embrace cryptocurrencies. However, as is quite often the case in China, this needs interpretation: it seems they’re willing to embrace cryptocurrencies, as long as they’re Chinese, causing some headaches for Bitcoin. Nevertheless, Bitcoin still thrives in China.
Elsewhere, Germany’s central bank (which recall, is governed by the ECB) has been actively studying how Bitcoin and other cryptocurrencies might be introduced to the German economic system. And in the UK, Bank of England Governor Mark Carney has said that cryptocurrencies will herald a ‘revolution’ in finance, putting his money where his mouth is by establishing an incubator for cryptocurrencies within the Bank.
These are just a small sample of the conversation that’s happening in central banks everywhere. What’s key here is that there is a conversation going on about Bitcoin. This phenomenon is just 10 years old and already has found itself on the agenda of the biggest central banks in the world. Now all it takes is for one to make a move and the rest are likely to follow en masse…