It wasn’t until the year 2017 that bitcoin got everyone talking. With it getting a boost in 2017, investors world over wouldn’t help but jump onboard. Nothing could stop them from investing in it even with the sudden ballooning of prices to extremes of $19,000.Others quickly turned their eyes on upcoming cryptocurrencies and traded them on the cryptocurrency market despite their shifting values hoping to make a killing. Mining cryptocurrencies thus became not only the order of the day but also a household name.
The Value of Cryptocurrency
Currently, the total value of cryptocurrency in circulation exceeds $100bn, and this has gotten financial experts contemplating if they should be included in the World Bank’s portfolio of international reserves. According to the Forbes, the cryptocurrencies could soon un-sit the dollar from the world reserve currencies. The article sites that the blockchain’s tendency to decentralize the manner in which trust is guaranteed in whatever thing that can be digitally stored including money and data remains a space to watch. In fact, Christine Lagarde, IMF’s head stated in September that cryptocurrencies might soon displace the Central Bank and other banking institution’s monies in the long term. With blockchain, it is nearly impossible to exaggerate the disruption of institutions and other business models.
State of Cryptocurrency
Wall Street Journal has it that the world is currently looking to have an international cryptocurrency in response to the bitcoin. The state of cryptocurrencies replacing the dollar as an international reserve is further fueled by the Dubai government’s intention to establish a state cryptocurrency. The cryptocurrency hype has also seen a myriad of banks that support a state-issued coin inform of a cryptocurrency. This has made the cryptocurrency market even more famous.
Blockchain Viability
While waters are still murky for the bitcoin and whatnot to displace the sovereign currencies, already they have demonstrated the viability of the blockchain. This has as well seen venture capitalists and other financial institutions immensely invest in distributed ledger technology (DLT) projects aimed at providing new, and better financial services.
After all these, the question begs, what are the factors that make cryptocurrencies to be included in the World Bank’s portfolio of international reserves? To unravel the mystery, they offer better value for money. For the nations with weak bank institutions and unstable currencies, adopting the virtual currency would be quicker and easier than adopting one from another country. This is called dollarization. Seychelles is the best case study, where dollarization jumped from 20 percent to 80 percent, 2016 to 2018 respectively.
Swift Blockchain Success
Cryptocurrencies offer better payment services. Cryptocurrencies not only provide an equal cost but also convenience is guaranteed. This means that one doesn’t have to deal with clearance delays nor central registration or settlement risks. Currently, privately virtual currency might seem risky. However, going moving forward with the central bank might only have to come up with digital forms of the legal tender. All that one would need is a cryptocurrency wallet, and they are they are off the hook.
As it is now, the dollar, (the primary international reserve) is only sitting on the edge. With more and more people accepting cryptocurrencies by the day, the dollar and local currencies will be restricted to local markets. Therefore the World Bank needs to act fast and put cryptocurrencies in the portfolio of international reserves.
