Indeed major stock brokers are going in for bitcoin as part of their platforms, central bankers have certain apprehensions about it as they feel it is a threat to financial stability.
Major Threat to Financial Stability
There are now several banks which do hold positions in bitcoin. It is for the supervisors to judge how big the risks are. One has to take into consideration the financial stability.
Money Needs Trust, Blockchain is the Real Threat
Commercial banks do indeed create digital cash in order to compete with the growing popularity of bitcoin. Blockchain technology issues need to be taken into consideration.
Unless and until a currency has been authenticated by a government, it is unlikely to be fully trusted.
The volatility of Bitcoin, as well as that of cryptocurrencies, have indeed become a threat not just to the international financial system, but also to the political order. The blockchain technology upon which cryptocurrencies are rather based does ensure a better as well as more secure payment mode than anything seen before. Many people do believe that cryptocurrencies will indeed replace the electronic currency in the traditional bank accounts, just as the electronic transfers did replace paper money, which in turn succeeded gold and silver.
Bitcoin indeed appears like a twenty-first-century version of gold. Pre-modern metallic currencies do serve as a basis for the labor theory of value. Blockchain technology does assign the value to a combination of computing power as well as stored energy.
Speculation has been rife that bitcoin will become the single global currency within a span of next decade. Bitcoin was expected to be an alternative to the dollar as well as gold. However, the cryptocurrency has indeed soaring record. No doubt, a bitcoin crash could have serious global implications.
