Earlier it was the political parties like the Libertarian Party that were advocating for a deregulated and decentralized currency, now the free-market Institute of Economic Affairs or IEA has come up to support the concept. The IEA says that the UK should privatize the pound and replace it with a cryptocurrency like Bitcoin.
Presenting the paper on the cryptocurrency Kevin Dowd, a professor of finance and economics at Durham University, said that although Bitcoin isn’t the first example of private money, it is the first that governments can’t shut down. He cited the example of Liberty Dollar, a private mint operated by Bernard von NotHaus.
The US government tried all its power to convict Mr. NotHaus and he is not languishing in jail for the charges of counterfeiting. Similar efforts have been tried on Bitcoin; however, the government has not yet been able to silence those who either use the digital currency or advocate it publically and that is the difference between Liberty Dollar and Bitcoin.
Kevin Dowd concurs that Bitcoin’s solution is to use a peer-to-peer network to check for double-spending and the result is a distributed system with no single point of failure. He quoted Satoshi Nakamoto, the alleged father of Bitcoin who said that the root problem with conventional currency is all the trust that is required to make it work.
Provide Level Playing Field to Bitcoin
Quoting Nakamoto he said that the central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. In his paper Kevin Dowd said that since Bitcoin’s inception in 2009, the demand for the digital currency has skyrocketed, albeit in a very volatile way, forcing its price from 3 cents to (currently) just under $600.
He believes that Bitcoin is a wonderful innovation. However, he casts a doubt and says that the pioneers in any industry are rarely the ones who last. He states that though Bitcoin has received a lot of success in a very short span of time, he cannot say clearly whether it is due to being the first mover or because it does not have any flaws.
Kevin Dowd believes that Bitcoin will eventually be displaced by even better crypto-currencies. However, he says that it is the first private money that governments can’t shut down and for that simple reason the authorities should admit that it’s here to stay, and allow competition on a level playing field between all alternative forms of money.
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