A new finance system was proposed by a Bank of Canada reasearch consultant. Warren E. Weber suggests changing from the standard fiat-currency to the cryptocurrency Bitcoin. Instead of using the gold standard of fiat-currency, Weber described the “Bitcoin standard”.
Following the Bitcoin standard
In his report Weber explains that Bitcoin would be a good alternative to fiat-currencies. He covers the economic growth of countries in europe as well as a couple in north america from the late 1800s to the early 1900s. Also explaining how the growth of bitcoin could be applied with the same principles. Knowing that the bitcoin has a set number of 21 million, established in its creation by Satoshi Nakamoto. Bitcoin has a set deflation, and by the year 2022 it is projected to reach a more stable growth rate of 1%.
This will be the test of time to see if the cryptocurrency follows the gold standard and its historical progression. But Weber claims the value of the bitcoin is based on the consumer value, after all bitcoin has a set capacity on the total number. This means that the value is very easy to project as time goes on.
The harsh prediciton
Regardless of all the hopeful things Weber has to say about the cryptocurrency, he strongly believes it will not come to fruition.
Warren E. Weber – “If the Bitcoin standard becomes real, neither the governments nor the central banks will be able to implement interest rates to affect their economies, neither could they generate seigniorage revenues obtained from their ability to ‘almost costlessly create money.”
The regulation by the government would be too much of a hinderence. While good for the populace, bitcoin would not aid the country based on the way the currency finds value. Banks would be able to provide loans, but without interest being applied in the current manner banks would struggle. However if these hurdles could be crossed, I personally believe a Bitcoin-standard would happen.