A leading British think-tank proposes privatizing the pound and replacing it with a virtual currency such as bitcoin or dogecoin.
Prof. Kevin Dowd, a member of Institute of Economic Affairs and an emeritus professor at Durham University argues that while bitcoin isn’t the first form of private money to be introduced, it is the first one that authorities cannot control. He therefore says that governments should accept that the currency isn’t going anywhere and hence should encourage its competition with other forms of alternative currencies.
This means allowing users to pay taxes with cryptocurrencies such as dogecoin and bitcoin, or privatise the pound fully by holding an auction to sell minting rights to the highest bidder.
“Let’s suppose that bitcoin became a very prominent currency,” Dowd spoke to the Guardian. “[To ensure a level playing field], the government itself would accept bitcoin in tax payments. So, in effect, the government should not be favouring its own currency, or any particular currency, through any of its unique powers. Nor have regulations against them.
To illustrate past attempts at blocking the rise of alternative currencies, Dowd cited the case of Liberty Dollar, a physical, gold-based privately-owned mint and e-gold, the electronic gold-based virtual currency that saw both creators and owners hauled to the court, with the former being charged on counterfeiting and the other on claims of money laundering. Dowd says the charges had political dimension behind them.
However, he argued that it will be difficult to stamp down on bitcoin in courts since it is decentralized. The only way to prevent bitcoin’s rise is to close the internet, something he considers impossible.
Nonetheless, Dowd does acknowledge that cryptocurrencies still have a long way to go before replacing conventional currencies. This means they must better some limitations faced by state money such as protecting against inflation, something that is guaranteed since only 21 million bitcoins will only be created. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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