Cryptocurrencies Case Study
How should governments respond to the rise of cryptocurrencies?
The 2007/2008 economic crisis resulted in a global loss of faith in the current financial system. The rise of cryptocurencies was the direct result of the economic crisis, but at the same time was inevitable given the ever more globalized world. In 2009 Satoshi Nakamoto published a paper introducing Bitcoin a peer-to-peer electronic cash system independent from any bank or government. That was 33 years after Hayek’s short pamphlet, The Denationalization of Money. The proposed system was based on the idea of exchanging unduplicable currency without the use of a centralized bank with transactions taking place directly from one person to the other while being protected by advanced computer encryption and verification (Cruickshank, Hub). The need for a central entity to process transactions and charge high fees was eliminated thanks to the new blockchain technology. As of 16 January 2018 there were 1450 cryptocurrencies. By market capitalization the biggest is Bitcoin followed by Ethereum and Ripple (Cryptocurrency Market Capitalizations). Bitcoin was first, but was quickly followed by other cryptocurrencies with different characteristics and functions such as smart contracts, higher transaction speed and lower processing costs. The currencies are in competition with each …show more content…
The regulation should respect the specific aspects of the new technology and refrain from excessive regulation so that the vast possibilities presented by cryptocurrencies are not smothered (Silva, UNICTRAL). National and international taskforces and sub-units comprising of experts, policymakers, businessmen and various governmental institutions such as the Central Bank, Ministry of Finance have been created in some
The 2007/2008 economic crisis resulted in a global loss of faith in the current financial system. The rise of cryptocurencies was the direct result of the economic crisis, but at the same time was inevitable given the ever more globalized world. In 2009 Satoshi Nakamoto published a paper introducing Bitcoin a peer-to-peer electronic cash system independent from any bank or government. That was 33 years after Hayek’s short pamphlet, The Denationalization of Money. The proposed system was based on the idea of exchanging unduplicable currency without the use of a centralized bank with transactions taking place directly from one person to the other while being protected by advanced computer encryption and verification (Cruickshank, Hub). The need for a central entity to process transactions and charge high fees was eliminated thanks to the new blockchain technology. As of 16 January 2018 there were 1450 cryptocurrencies. By market capitalization the biggest is Bitcoin followed by Ethereum and Ripple (Cryptocurrency Market Capitalizations). Bitcoin was first, but was quickly followed by other cryptocurrencies with different characteristics and functions such as smart contracts, higher transaction speed and lower processing costs. The currencies are in competition with each …show more content…
The regulation should respect the specific aspects of the new technology and refrain from excessive regulation so that the vast possibilities presented by cryptocurrencies are not smothered (Silva, UNICTRAL). National and international taskforces and sub-units comprising of experts, policymakers, businessmen and various governmental institutions such as the Central Bank, Ministry of Finance have been created in some