‘Bitcoin Won’t Fulfill Basic Roles of Currency’ but Why They Want Central Bank Digital Currency

Bitcoin and other cryptocurrencies have numerous proponents who believe that they can give a tough competition to traditional currency issued by central banks around the world. However, an official from the Romanian Central Bank believes otherwise.

According to reports, Daniel Daianu, a member of the Romanian National Bank (BNR)’s Administration Council, has recently stated that cryptocurrency won’t replace the currency issued by central banks as it cannot fulfill the basic roles of currency. 

In my opinion, these are financial assets, not cryptocurrencies, and they won’t be able to fulfill the basic roles of currency. Currency is always backed by a last-resort lender. In markets, the state is the only possible last-resort lender.

Daianu, despite claiming that cryptocurrencies will never be able to substitute the currency issued by a central bank, did not completely reject the idea of digital currencies.

“What can happen is for central banks to have a digital currency, but that will also be issued by the bank, and commercial banks will receive digital currency that can multiply. I do agree, however, that new technologies lead to disintermediation and this feature of decentralization shows us the merits of networks”.

He further stressed upon the necessity to be aware of the difference between institutions and their roles:

We must be aware of the difference between institutions and the roles they have. It is important for these roles not to disappear.

However, while Daianu emphasized the importance of the current banking system, he also acknowledged the fact that technologies are important to ensure business models and that they have always done so.

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But he believes that segmentation is nonetheless important because segmentation of markets has been done for decades. He then segued to another essential issue — the distinction that must be made between technologies like blockchain and cryptocurrencies.

More often than not cryptocurrency and its underpinning technology, blockchain, are considered one and the same thing when in reality they are distinct from each other. Blockchain is not restricted to cryptocurrency, it’s a decentralized, distributed digital ledger that offers its services to scores of industries across the board.

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The post-crypto world has divided people into two categories: there are those who believe in cryptocurrency and trust that it will be worth investing their hard-earned money in, and then there’s a good number of people who are skeptical about the whole thing and actually do not trust cryptocurrency. Surprisingly, the later comprises of some of the most prominent names in various industries.

Nouriel Roubini

Roubini Global Economics Chairman, Chief Economist and Co-founder, Nouriel Roubini, has been very candid about his dislike for the famous bitcoin. He once shared:

“Most Bitcoin/shitcoin investors are retail suckers who are clueless/financially illiterate. That’s why we have laws that leave risky investments only for accredited investors who have a certain level of income/wealth. But millions of BagHolders were illegally suckered into crap”.

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Jack Ma

The name of the founder and chairman of the famous Alibaba Group might be surprising because of the group’s involvement in blockchain-powered projects. However, this is where the aspect of distinction comes into play, that blockchain and cryptocurrency are different, and while Ma is proponent of the technology, he isn’t much of a believer in Bitcoin. He was reported saying:

Blockchain technology could change our world more than people imagine. Bitcoin, however, could be a bubble.

Mark Carney

The governor of Bank of England, Mark Carney shares a similar set of beliefs as that of Romainain Central Bank’s Daianu. He was reported saying:

“For many reasons the crypto-assets in your digital wallets are unlikely to be the future of money … But that is not meant to dismiss them. Their core technology is already having an impact. Bringing crypto-assets into the regulatory tent could potentially catalyze innovations to serve the public better”.

Cryptos and Romania

Contrary to what Daianu’s statement would have you believe, Romania hasn’t turned a blind eye to cryptocurrencies altogether. In fact, it became the first Eastern European chapter affiliate of the Bitcoin Foundation back in 2014. The Bitcoin Foundation is a community of bitcoin proponents helping to create awareness about benefits of the cryptocurrency, how to use it and its related technology requirements for technologists, regulators, media and everyone else globally. The foundation said in a statement that Romania would push educational efforts in the country of 21 million and encourage consumers as well as merchants to adopt bitcoin locally.

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However, the country is not willing to accept cryptocurrency without regulations. Earlier in July 2018, the Ministry of Finance of Romania released a draft Emergency Ordinance which regulated the issuance of electronic money (e-money). It is strange and some way confusing when Daniel Daianu undermined bitcoin and cryptos potential but at the same time he is ‘ok’ with central banks digital currency.

All this goes to show that Romania might not be the most thrilled about mass crypto adoption considering the country’s controlled and measured steps towards it.

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