As Bitcoin and Ethereum continue to gain traction and value in society, it will only be a matter of time before governments, with a vested interest to gain controls over and regulate such currencies, consider creating their own cryptocurrency. But can that realistically work?
Ethereum founder Vitalik Buterin doesn’t think so. A central bank-backed cryptocurrency would simply amount to “a server and a bunch of marketing buzzwords to make it look like a blockchain,” says Buterin, according to Jeff John Roberts’ latest Fortune report.
Some Australian financial technology startups (FlashFX, AgriDigital and Othera) have, according to a report by the Australian Financial Review, been pressing the Reserve Bank of Australia (RBA) to consider the ‘Digital Australian Dollar’, dubbed the DAD. The DAD will be directly tied to the fiat Australian dollar and “would be a huge step to grow our vibrant blockchain and digital currencies industry,” said FinTech Australia chief executive Danielle Szetho.
Other Central Banks, such as Malaysia’s are going as far as considering banning cryptocurrencies in an attempt to stop it’s use, but frankly, this at best is a stop gap measure that will lead to more issues than resolution.
All this activity confirms that cryptocurrencies are not a passing fad, but an important key financial technology innovation that will prove to be one of the most important monetary shifts in history. Just be ready for a very rocky ride as governments come to grips with its adaption. Expect conflicting government policy shifts and some knee jerk reactions which could cause instability to cryptocurrencies for some time to come.