21 experts tell us what the future looks like for cryptocurrencies and blockchain

21 experts tell us what the future looks like for cryptocurrencies and blockchain

It’s been a little over nine years since Satoshi Nakamoto, the anonymous creator (or creators) of Bitcoin, published the paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System.  Written off for many years, Bitcoin and other cryptocurrencies have since risen to prominence and economists, traders, financial gurus, central bankers and other financial authorities around the world are taking notice.

Bitcoin, the most famous of the seemingly now myriad cryptocurrencies floating around the internet, recently rose to above USD 10,000 for the first time. In fact, Bitcoin has grown from USD 1000 in January 2017 to over USD 10,000 in November 2017. That right there is what you call a tenbagger. Peter Lynch would be proud.

Although Bitcoin and its skyrocketing price tend to get all of the headlines, perhaps its greatest contribution is the technology behind it. The creator(s) of Bitcoin originally sought to create an electronic currency that would allow electronic payments to be sent from one party to another without the need of a central intermediary. Enter blockchain technology.

What is blockchain?

Blockchain, or distributed-ledger technology,  is a public ledger of all cryptocurrency transactions. It is digitized and decentralized, or in other words, it is shared on an anonymous network of cryptocurrency users referred to as nodes. The blockchain is continually growing with what are called completed blocks, which are the most recent transactions. Each anonymous transaction is time-stamped, verified by users and linked, or “hashed” if you will, to the chain of blocks in chronological order, similar to the links on a chain.

Each block on the chain is connected to the next using hashes. Each hash is unique to the block, so if a block were changed in any way after it was added, then the hash would also change. Since each block is connected using the hash of the previous block, then changing one block or hash would make all of the subsequent blocks and hashes incorrect as well. This essentially works as a digital wax seal, creating a public and permanent record of each transaction that cannot be altered or erased. This means there is no need for any central recordkeeping to verify and keep track of the transactions such as a bank. 

What is cryptocurrency mining?

Each time a transaction is made, it must be verifed by what are called "miners". Cryptocurrency mining essentially involves solving complex math problems to confirm the transaction and add it to the general ledger. Each time a new block is confirmed by the miner, or hashed, the miner is rewarded with some amount of the cryptocurrency. This is the incentive to keep miners participating in the blockchain and keep the transactions flowing.  

Benefits of blockchain technology outside of cryptocurrencies

One of the most attractive aspects of blockchain technology is its approach to security. It's not unhackable, but it's about as close to being unhackable as possible according to Alex Tapscott, CEO and founder of Northwest Passage Ventures, as quoted in ComputerWorld:

"In order to move anything of value over any kind of blockchain, the network [of nodes] must first agree that that transaction is valid, which means no single entity can go in and say one way or the other whether or not a transaction happened," according to Tapscott. "To hack it, you wouldn't just have to hack one system like in a bank [...] you'd have to hack every single computer on that network, which is fighting against you doing that."

Besides the obvious advantage of securing data, blockchain also presents tremendous opportunities to industries and companies by potentially eliminating inefficient business processes. It would allow businesses to streamline internal processes by reducing the headcount in back offices, reducing errors and repetitive confirmation steps, and delays in processing caused by more traditional practicies of harmonzation of records. For example, the technology could replace inefficient accounting and payment networks in the financial industry. 

Blockchain technology would result in massive cost savings to businesses. Goldman Sachs recently published a report stating that blockchain technology could potentially save stock markets up to USD 6 billion a year.

The nature of the blockchain has presented not only companies and stock markets with a tremendous opportunity to simplify business processes, but central banks and monetary authorities also appear to be exploring the implementation of blockchain to create their own digital currencies.

It may be a case of, “if you can’t beat ‘em, join ‘em” for central bankers as their interest in the potential for blockchain to create their own fast and efficient digital currencies grows. Digital currency would eliminate the cost of handling cash and allow for it to be easily tracked as it moves through the financial system. It would also present benefits in reducing risk, fraud and execution of monetary policy.

Are cryptocurrencies the future or a bubble about to burst?  

With the advent of blockchain technology and cryptocurrency prices skyrocketing, are cryptocurrencies the future or are they nothing but the 21st century version of Tulip Mania? Could a central bank really create its own digital currency? What could this mean for the global economy and financial markets?

These are the questions we posed 21 world renowned economic and finance experts. Find their responses below.

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daniel_lacalle_focuseconomics.jpgDaniel Lacalle

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

Cryptocurrencies are a response to the currency wars and monetary destruction implemented by central banks. Citizens are looking for ways to escape the purchasing power destruction agenda carried out by the main monetary authorities, and this makes cryptocurrencies attractive as a store of value and investment. However, volatility is too high and their penetration as a means of payment is too low to call them currencies, therefore we could talk of "start-up currencies". There is plenty to wait for before considering them real valid currencies. 

What I find amusing is to read that the same people who have never identified a bubble have immediately jumped at calling cryptocurrencies a bubble. The value of a currency is not decided by governments but by citizens accepting its purchasing power and making it a general mean of payment. Fiat currencies have no backing whatsoever anyway, so this makes me believe that these commentators want to call them "bubbles" because cryptocurrencies threaten the monopoly of money creation of states and put at risk the inflationist agenda of central banks. 

It is simple. The democratization of money creation is inevitable. As Friedrich Von Hayek pointed out, economic instability and government growth are wholly caused by bad money and fiat currencies are under question.

Creating a new money that is not subject to centrally planned and government imposed increases in money supply threatens current government money. Many currencies, as Hayek predicted, are likely to circulate simultaneously, and the public may end up prefering private money because government money is constantly depreciating. In time, Hayek said, private money would outcompete public money.

Cryptocurrencies, as private money where supply is not centrally distorted, are likely to curb governments' currency depreciation incentives. And that is always a positive.

Could a central bank really issue its own digital currency in the near future?

A central-bank-issued cryptocurrency is in itself an oxymoron. What is the purpose of a cryptocurrency where money can be issued without control like current fiat money? It makes no sense unless money supply is controlled. The only value of cryptocurrencies for citizens is that supply cannot be manipulated. In general, blockchain and cryptocurrencies will have a very significant impact in financial markets as competition will not be generated through beggar-thy-neighbour currency wars -ie who "depreciates more"-, but who is offering the most sound monetary policy.

Check out Daniel's recently released book entitled Escape from the Central Bank TrapRead our review here.

Visit Daniel's website and follow him on Twitter here.


Colin Lloyd

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

In a world of fiat currencies, even more than at the time of Richard Cantillon, a debasement hurts those furthest from the source. Bitcoin and its immatators are a natural reaction to the moribund profligacy of sovreign states. They offer a means of exchange and finite supply (which isn’t quite the same as a store of value – but then again we could argue about the real value of diamonds and gold). Is it a bubble? Probably, but I have seen estimates of fair value ranging from zero from the doomsters to USD 23,000 from ‘reasonable men’. I do not expect governments to cede power over the creation of money, the exorbitant previlege is of too great a value. Should that risk become tangible digital currencies will be legislated against on the grounds of economic and national security.

Could a central bank really issue its own digital currency in the near future? 

The underlying distributed ledger technology which has propelled bitcoin and its peers to their current notoriety, is not new but it’s applications are incredibly valuable. If governments can dispense with cash it will become far more difficult for people to avoid/evade taxation. Theft can hopefully be reduced improving the safety of citizens. I don’t believe the introduction of a central bank issued digital currency will have any immediate impact – although it might make the banks nervous. It would be relatively easy to nationalise the banking system once a digital currency was widely adopted. No need for a middleman. 

Read more from Colin on his blog In the Long Run.


constantin_gurdgiev.jpgConstantin Gurdgiev

Cryptocurrencies, in their current forms, are a niche asset class that primarily offers protection against tail risks of capital controls and government expropriations of wealth. The cryptos currently face two key, unresolvable dilemmas that will continue restricting their applicability well into the future. 

The first dilemma is that cryptocurrencies' success and market share of general money instruments markets requires their wide adoption as a medium of exchange and transfer of value. Such adoption, however, will lead to a rapid and large scale imposition of regulatory controls over the markets for cryptos by the very same regulators that the cryptocurrency investors are attempting to escape. 

The second dilemma is that cryptocurrencies lack any fundamental links to the real economy and financial markets. The key arguments in favour of their existence rely on either utility of blockchain technologies behind their algorithms, or the restricted nature of their supply, or the claim that cryptocurrencies offer protection from excesses of traditional monetary policies. These arguments simply do not hold. Blockchain technologies are evolving away from public blockchains toward private, better secured and regulated blockchains. This trend pushes key cryptocurrencies toward becoming exotic, purely mathematical, constructs that do not relate to any tangible economic value added, distorting their valuation away from transactions-based demand, toward purely speculative demand. The limited nature of cryptocurrencies supply no longer holds in the wake of numerous 'forks' applied to Bitcoin and Ethereum, the two main cyptos. Beyond this, both arguments fail when one considers continued erosion of Bitcoin security. In terms of protection against monetary policies excesses, to-date, no cryptocurrency exhibits any empirical evidence of serving as either a hedge or a safe haven against inflation, or drawdowns in any major asset class, be it bonds or stocks. More ominously, experience during the Global Financial Crisis shows that highly financially instrumented asset classes (including gold) can exhibit stronger, not weaker, positive correlations with leveraged investment portfolios. This suggests that major cryptocurrencies can experience strong positive correlations with other asset classes in times of severe market distress. Finally, the weakness of the argument that cryptos can be an effective hedge against Central Banks'-led monetary policies fails when one considers the argument that to be sustainable, cryptocurrencies must be liquid and convertible vis-a-vis traditional currencies. This sustainability criteria de facto links cryptocurrencies future to traditional currencies valuations, and as such, directly to the Central Banks' monetary policies.

In my view, it is highly likely that we will see emergence of large volume markets in regulated, Central Banks-controlled cryptocurrencies, such as the crypto-Dollar or crypto-Yen. Central Banks around the world are experimenting with both the blockchain technologies and cashless payments systems, and majority of the Central Banks view cashless payments as the future of transactions technology. Thus, Central Banks have both the incentives and the fire power to create and distribute officially regulated, fully compliant cryptocurrencies.

Visit the blog True Economics as well as the website MacroView for more from Constantin. You can also follow him on Twitter here.


karl_denninger.jpgKarl Denninger

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

They're a fraud. Let's lay it out:

All existing cryptocurrencies are designed around a math problem that gets exponentially harder to solve as time goes on. However, the number of "coins" you achieve for solving it is fixed irrespective of where on the curve you solve it. This is a Ponzi scheme by definition since the first people obtain a given reward for little effort yet later people must expend exponentially greater effort for the same reward, and the laws of mathematics say that eventually the reward cannot be had for any rational (or even possible) expenditure. 

That's the definition of a Ponzi scheme. They are thus all illegal -- every one of them -- under said laws, and are designed to funnel money from later adopters to earlier adopters. Note that "price appreciation" and similar has nothing to do with it. That governments are ignoring this doesn't change the fundamental character of what's going on.

In some examples the number of coins is actually limited, meaning that eventually there is no further problem to solve and no reward to be had from solving it. This makes the above problem even worse because someone has to clear transactions ("accept" them in the blockchain as the previous signatures verify) and in the present model the verifiers are the miners, who are already working the problem. What happens when there are none either because the coins are exhausted OR the exponential nature of the problem no longer makes it economic to mine, and how do, in that instance, the verifiers get paid?

They're thus not a bubble, they're a scam.  Period.

Could a central bank really issue its own digital currency in the near future? 

Maybe.  Blockchain itself is a different matter.  The use of self-attesting cryptographic signatures is an interesting thing, and it has many applications.  However, that's separate from the actual currency function itself.  There's nothing to stop a central bank from using blockchain as a verification means for their currency, and that may well happen.  However, as things stand right now the verification speed and difficulty (cost) is too high and thus results in too much transactional friction in all existing models.

I find it particularly amusing how Coinbase claims to be some great transactional thing -- compare their cost of clearing with, say, that of the existing credit card interbank network (not the discount charged to the merchant, the ACTUAL cost of clearing.)  Get back to me this when the "cryptocurrency" clearing cost is materially cheaper (today it's MUCH higher) and perhaps blockchain will then have an argument in that context.

This, by the way, is why various financial firms are working on this -- irrefutable transfers with a complete chain of custody back to origin, admissible in court as they are mathematically provable, are extremely powerful things.  But that too destroys one of the arguments for "Cryptos" -- they are most-definitely NOT anonymous in ANY way; to the the contrary every single transaction ever committed in such a "currency" is indelibly and permanently recorded.  In that regard they're actually vastly superior when it comes to proving up and busting people for doing things some government doesn't want you to do!

Visit Karl's blog The Market Ticker and follow him on Twitter here.


lawrence_mcquillan_independent_inst.png

Lawrence McQuillan

Cryptocurrencies are still in their infancy, so it is too early to know what the future holds. But the political manipulation of traditional currencies, along with their volatile changes in value expressed through periods of inflation, hyperinflation, and deflation, make cryptocurrencies a much-needed potential source of monetary competition and price stability.  The underlying institutional structure is still being built to bring about this competition and stability, but entrepreneurs around the world are hard at work creating it.  Cryptocurrencies offer the potential for a brave new world of private, competitive, stable currencies, without harmful government manipulation of fiat currency that we have seen throughout history.

Lawrence is a Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute. You can follow him on Twitter here.


amol_agrawal.jpg

Amol Agrawal

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

Cryptocurrencies have surely emerged as an alternative in countries where the authorities manipulate and devalue currencies. The key to it becoming an alternative to traditional currencies is mainly dependent on government policies. And as governments make so much easy money via currency printing via seignorage and also control the economy, they will do their best to oppose cryptocurrencies. 

Could a central bank really issue its own digital currency in the near future?

Central banks are already in the digital space in major way. Much of reserve creation happens digitally and we make quite a bit of payments digitially. What is more interesting is whether the banknotes/coins etc will be totally replaced by digital money.  It will all depend on consumer preferences. 

Visit Amol's website and follow him on Twitter here.


barter_is_evil_david_t_flynn.jpg

David Flynn

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

Payments and monetary systems are subject to disruptive innovations too. While there are significant regulatory controls possible in the case of legal tender, history is full of examples of black market activities that were profitable, productivity enhancing, or both. Crypto currencies clearly fit this mold. As more transactions take to the online and mobile spaces, it becomes more likely they supplant traditional currencies. The specific timing of a transition is still unclear though. It is also the case that we can see a few failed currencies along the way. The investment aspects of the crypto currencies seem accepted now, but the general usage is still lacking.

Could a central bank really issue its own digital currency in the near future? 

Absolutely we could see a central bank taking this path. I would anticipate it happening in an economy with significant foreign exchange or inflation concerns or significant black market activity. Alternative currencies are attractive in the presence of these issues and therefore represent a threat to the existing policy regime. Outright bans, while frequently attempted, are seldom effective in the long run. The impacts on the world economy will depend on the degree of signaling prior to adoption and the size of the economy where the change occurs. It seems likely to be interpreted as a desperate move in the case of a developing country. Domestic financial markets likely take a hit and foreign exchange will go through an adjustment period. I suspect this is a situation where there will not be a first mover advantage.  

Visit David's website Barter is Evil and follow him on Twitter here.


livio_di_matteo_wci.jpgLivio Di Matteo

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

A cryptocurrency is a digital currency that uses encryption for security in order to prevent counterfeiting. Whether or not a cryptocurrency can replace a traditional currency in the end will depend on what its value added is relative to traditional currency. Money is used as a unit of account, a medium of exchange and a store of value. It is still an open question at this point in time as to whether a cryptocurrency is superior to traditional currencies. Money in the end is a social convention and digital supplanting traditional currencies in the end requires a widespread acceptance of cryptocurrencies by the public and they will only do that if they see a benefit in terms of any of the three basic functions of money especially in terms of how secure they are as a store of wealth. A potential source of value added is if a cryptocurrency becomes acceptable as a way of digitizing cash with the same privacy as cash for users. I would venture that there may come a time when these alternative currencies could supplant traditional currencies but they will probably require legitimization by monetary authorities and that will only happen if there is public demand and increasing use of private cryptocurrencies as a cash alternative.

Could a central bank really issue its own digital currency in the near future? 

A central bank issuing its own digital currency would be a way of legitimizing cryptocurrencies but again it is difficult to see what the value added of doing this would be for any national central bank. In essence, it would amount to countries issuing two currencies – one traditional and one digital with an exchange rate between the two thereby potentially adding to the transaction costs of doing business. Where a cryptocurrency might make sense for a central bank is as a way of streamlining transactions between financial institutions but the benefits here would be greatest is there was an accepted global cryptocurrency. Perhaps a monetary innovation for the 21st century will be a global central bank created as a consortium between national central banks that then issues a global cryptocurrency to facilitate both international and national financial transactions. If such a move is successfully implemented, it could certainly improve the operation of world financial markets and the world economy.

Visit Livio’s blogs Worthwhile Canadia Initiative and Northern Economist 2.0


charles_smith_of_two_minds.pngCharles Hugh Smith

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

The ideal scenario for consumers is a variety of transparent currencies that can be exchanged for modest fees. Cryptocurrencies already have a role in this environment, and that role could expand if some cryptocurrencies retain their purchasing power compared to fiat currencies due to the fact that their issuance is limited—in bitcoin’s case, 21 million coins.

Could a central bank really issue its own digital currency in the near future? 

Central banks may well issue their own cryptocurrencies, but the question is: who would trust them not to issue more currency if they decided it was necessary to do so? This is precsiely why people have lost trust in central bank-issued currencies: tens of trillions of new currency is borrowed into existence and funneled to the super-wealthy at the top of the wealth-power pyramid. There is no reason to think the central banks will do anything differently with a cryptocurrency they conjure up. The primary appeal of cryptocurrency is that is is decentralized and NOT in the control of centralized, opaque, self-serving central authorities.

Visit Charles' blog Of Two minds and follow him on twitter here.


david_merkel_aleph_blog.pngDavid Merkel

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

Bubble, aside from illicit activities (which in some nations are good things – evading currency controls and escaping with most of your liquid wealth)

Could a central bank really issue its own digital currency in the near future? 

It would be easier to change the value of cryptocurrency than paper money, making inflation easier. Of course central banks would like to do that. But it will cease to be anonymous. Central banks will not create a cryptocurrency where they don’t know the holders.

Visit David's website The Aleph Blog and follow him on Twitter here.


chad_chaganomics.png

Chad Hagan

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

The main advantage is the transfer system. Apart from cash, money cannot be transferred without much of a record. That is the beauty of Bitcoin. Blockchain is quite impressive. While there is a record, there is also anonymity. If you look at the phenomenon around the importance of mobile air minutes to the economy in Kenya, you can see how Bitcoin universally fills a void. There is also a utility aspect to BTC that is very helpful. However, the utility value does not supprt the high prices and ultimately I believe bitcoin is worth a fraction of it's current value. Maybe $350.00 a unit.

Could a central bank really issue its own digital currency in the near future? 

I see this as an absolute possibility. The question is when and why? Fixed income and government bonds could be cleared easily using blockchain systems, and futures delivery of treasures could also use blockchain as the contracts expire. I see that as the first roll-out of cenbank cryptocurrencies. They would be digital counter parts to fiat currency, which may dismay the digital purists. 

Visit Chad's website and follow him on Twitter here.


miles_kimball.jpegMiles Kimball

Governments will retain control of currencies. But the blockchain technology is very exciting. What is most exciting is the possibility that the credit-card/debit card oligopoly might be disrupted so that fees come way, way down.  

Many central banks are working toward issuing their own digital currencies. The simplest way is to give fintech entrepreneurs low-cost access to a central bank clearing mechanism with streamlined regulations for fintech accounts that are 100% backed by central bank reserves. Some central banks are thinking of giving individuals the equivalent of a central bank reserve account.

There are two big effects on the world economy and financial markets. The first is that a 1 percentage point reduction in credit card/debit card fees from disruptive digital competition is like a 1 percentage point reduction in distortionary taxes. The second big effect on the world economy and financial markets is that when a bigger and bigger fraction of transactions are electronic, central banks will see a smaller political cost to modifications in paper currency policy that allow deep negative interest rates. See "How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide"  for a discussion of possible changes in paper currency policy that keep paper currency in the picture but allow deep negative interest rates.

Visit Miles' blog Confessions of a Supply-Side Liberal and follow him on Twitter here.


dean_baker_beat_the_press.jpgDean Baker

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

I think the private cryptocurrencies are a bubble and will collapse. They aren't a real currency, nor are they close to being one. Among other things, the massive fluctuation in the price of bitcoin makes it a very bad currency.

Could a central bank really issue its own digital currency in the near future? 

I do think central banks will adopt digital currencies in the not too distant future. It should lead to substantial savings in financial transactions and hopefully put much of the industry out of business.

Visit Dean's CEPR blog Beat the Press and follow him on Twitter


neven_valev.jpgNeven Valev

In my opinion they will exist but will serve a very limited function as they are not a reliable store of value. For something to serve as money in large parts of the economy, it has to hold value fairly predictably. This happens only if it is backed by a solid political structure. 

Visit Neven's websites TheGlobalEconomy.com and GlobalPetrolPrices.com.


keh_houghton_angry_bear.pngKen Houghton

I admit not being an advocate of cryptocurrencies, since they depend on stock (or creation of stock) and therefore have a virtually insurmountable first-mover advantage,  which makes them more inherited wealth than a tool of capitalism.   (They're good for money-laundering,  too, and I'm not seeing a path by which that ceases to be true, so the incentives to adopt one are skewed.) Blockchain is a useful tool, a consolidation of concepts that floated around for years that people recently found a way to monetize. It's potential value in distribution and collaboration should not be minimized. Using it to create "cryptocurrencies," however enjoyable,  is unlikely to be its ultimate, or even primary, benefit. 

That said, Central Banks don't need to create cryptocurrencies; they already create fiat money, which is an equivalent instrument without the limitations (need to mine metals) or impaired reputation (established regulation and enforcement procedures), along with facilitating asset attrition from poor decision making to limit  (though certainly not eliminate) the ongoing advantages of primogeniture and inherited wealth that remain from the days when money creation was itself constrained in the same manner as the current cryptocurrencies.

Ultimately,  fiat money is more democratic / egalitarian than the cryptocurrencies,  so any significant movement toward them would be a strong indicator of movement away from democracy and its economic handmaiden, capitalism. Governments explicitly moving to cryptocurrencies would be a step backwards,  if you assume capitalism is better for economic growth than mercantilism or autocracy.

Which I do.

Read more of what Ken has to say on the Angry Bear blog.


timothy_taylor.jpegTimothy Taylor

My own view is that cryptocurrencies will continue to have a limited and niche role in the future, and I do not think that any leading central bank will issue cryptocurrencies. There are practical problems, like the speed of making and verifying a transaction through blockchain is too slow. And there are political limits which is that governments will want to maintain their power to track large financial transactions in certain situations, so the anonymity of cryptocurrencies will always be under attack. That said, I think blockchain technology is likely to be widely used in a wide array of other areas related to establishing ownership and identity. Potential examples include managing global supply chains to identify the source of each input; registries for land ownership; validated proof of identity; ownership of digital media products; and facilitating international smaller-scale financial transactions like remittances. 

Visit Carola's blog Conversable Economist and follow him on Twitter.


elliott_morss_global_finance.jpgElliott Morss

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

Consider first what a currency is supposed to do. It is intended to replace barter (trading goods/services for goods/services). To fulfill this goal, it must be trusted as a store of value and thereby as a medium of exchange. Gresham's law is relevant here. It is a monetary principle stating that "bad money drives out good." So trust is definitely key. Right now, the USD is the leading currency. And while its value fluctuates relative to goods, services and other currencies, these fluctuations are not large and quite predictable. So a successful cryptocurrency would have to best the dollar's performance. And I see nothing on the horizon as a plausible competitor. 

Could a central bank really issue its own digital currency in the near future? 

Sure, a central bank could issue anything it wants to. The question is whether there would be any takers. Some argue we are moving into a digital world and there is evidence to support this. But every day, we hear of successful hacker inroads. And these hackings will drive people back to "physical" currencies.

Read more from Elliott on the subject in his latest post Blockchains - What Are They? What Can We Expect?

Visit Elliott's website Morss Global Finance and follow him on Twitter.


mike_shedlock.pngMike "Mish" Shedlock

Cryptocurrencies are most assuredly in a bubble. There are hundreds of them and most will be worthless. 

I suspect Bitcoin will survive, but at what price? That's the question. A return to $300 or less is not out of the question. 

As for government-sponsored currencies, cash will undoubtedly be phased out. You can see the beginnings already. India, Australia, and Europe all have attacked paper.

Unfortunately, there will be no escape anywhere but government bonds (tracked), gold (tracked), crypto-currencies (tracked).

Read some of Mish's recent posts on his website related to cryptocurrencies:
Bitcoin Debate: It's a Bubble! No, It's Not, It Cannot Be a Bubble!
Blockchain and Gold Like Peanut Butter and Chocolate?

Visit Mish's MishTalk to read more of his content and follow him on Twitter.


david_smith.jpegDavid Smith

There are clearly bubble characteristics to some cryptocurrencies and bubbles, by their nature, usually burst. Whether that undermines confidence in them remains to be seen. But, as the interest from central banks shows, we are moving beyond curiosity. Digital currencies will plainly have an important role to play in an era of declining cash use. As the Bank for International Settlements has pointed out, they may become the only way in which consumers hold central bank money. We will, I think, increasingly see central banks offering a digital alternative. They will tread carefully, in order to minimise the impact on the economy and markets, but they will also have the effect of bringing cryptocurrencies into the mainstream.

Visit David's website Economics UK and follow him on Twitter.


daniel_nevins.pngDan Nevins

1. Cryptocurrencies are here to stay, mainly because they’re either weakly correlated or negatively correlated with investments denominated in fiat currencies. They offer diversification.

2. They'll also continue to attract momentum traders. Purely technical strategies should work as well in crypto as they did in the first fifteen years or so of floating fiat currencies (post–Bretton Woods).

3. But they won't supplant existing monetary and banking systems. Governments will continue to issue currencies by fiat; banks will continue to extend credit by creating money denominated in fiat currencies; and investors will continue to view precious metals as a hedge against the risks of fiat currencies.

4. Security risks are a clear disadvantage relative to either fiat currencies or precious metals.

5. We shouldn’t put much weight on the claim that cryptocurrencies will dominate other currencies due to their limited supply. With no limit to the number of currencies that people create, the total crypto supply is no more constrained than the total fiat supply.

6. Even the most established cryptocurrencies could be outcompeted by new currencies with better features (quicker payment speeds or better security, for example).

7. Governments and central banks will only add to the competitive pressures. Determined policy makers will eventually launch supplemental currencies based on distributed ledger technology and then give those currencies advantages over currencies they don’t control.

8. Related to #5, #6 and #7, many cryptocurrencies will fail.

Visit Dan's website Nevins Research to read more of what he has to say.


mike_norman.jpgMike Norman

Could cryptocurrencies supplant traditional currencies or are alternative currencies a bubble that will eventually burst? 

I would never say never, although if it happened it would be a terrible development. Like a gold standard. It would increase the frequency of panics and busts and it would concentrate wealth even more than now.

Could a central bank really issue its own digital currency in the near future? 

All currencies are already digital. Governments and central banks credit bank accounts electronically, the only difference being, they are not constrained in their ability to do so (maybe politically). Cryptocurrencies are limited in nature because they are difficult and expensive to "mine."

You can also follow him on Twitter here.


What will come of cryptocurrencies is anyone's guess at this point, but it certainly looks as if blockchain technology has a future. However, we will just have to wait and see what happens.

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Date: December 4, 2017


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