Cryptocurrencies are steadily gaining support and popularity and, as a result, many experts believe that governments will launch fiat-based digital currencies.
Governments Are Embracing Cryptocurrencies
In this year many governments and regulators have taken measures regarding cryptocurrencies, exchanges, and ICOs. 2017 has been a very interesting and exciting year for the whole cryptocurrency space. The Japanese government officially recognized and legalized Bitcoin as a payment method, and this decision surprised many cryptocurrency users. Later in the year, Chinese regulators suspended several cryptocurrency sites and exchanges amid plans to introduce official regulations. This caused a massive exodus of Chinese cryptocurrency traders, and many decided to use exchanges based in Japan and South Korea in order to bypass this ban.
Recent news emerged that the government of Belarus officially legalized cryptocurrencies and gave them tax-exempt status for the next 5 years. Belarus is aiming to attract more fintech and cryptocurrency startups/companies into opening operations in its country and thus become an international cryptocurrency hub.
Is It Time for a Fiat-Based Digital Currency?
Many analysts have speculated that governments and financial institutions will launch their own fiat-based cryptocurrencies in order to compete with decentralized ones like Bitcoin and Ethereum. Many central banks have already started testing their own digital currencies. The most famous example is the prototype digital currency that the People’s Bank of China has been quietly testing. A report by TechCrunch stated that the Russian government is also exploring the possibility of creating its own state-issued cryptocurrency called CryptoRuble.
Many governments around the world are currently experimenting with digital currencies and their possibilities. The DailyMail reported that the Eurozone, however, has no plans to introduce its own fiat-based digital currency. Specifically, Bundesbank board member Carl-Ludwig Thiele does not see a possibility for the Eurozone to introduce its own cryptocurrency in the near future. He further stated:
Digital central bank money analogous to cash is currently not in sight.
He also added:
We are seeing a rapid increase in value, which brings the risk of rapid losses,
The main reason behind this is the fact that fiat-based cryptocurrencies might bring unpredictable issues like scaling, security, and costs. Besides, many experts believe that the astronomical rise of Bitcoin may concern central banks from adopting their own digital currencies.
What are your thoughts on a Eurozone-based digital currency? Do you think that a government-issued cryptocurrency might benefit consumers and banks? Let us know in the comments below!
Images courtesy of Pixabay, ShutterStock
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