Financial institutions are looking for ways to expose clients to new assets. Gold and precious metals have always made their mark in this regard. Bitcoin is also on the shortlist, although it has yet to gain any widespread significant traction. Considering the digital asset’s current volatility, that may be for the best – at least for now – as major economies need stability more than anything else.
Bitcoin in the Financial Sector
Governments and central banks have very tough decisions to make. Their goal is to create financial stability. A monumental task in this day and age, as so many factors influence domestic economies. How things will progress is subject to much speculation. There is no unified global approach to speak of, which is also what makes these impending changes so interesting.
In Europe, the primary focus lies on improving overall competition. There will be a growing focus on Bitcoin and other cryptocurrencies. In what capacity that will be, remains to be determined. There is no active Bitcoin regulation in most of Europe. Nor will there be any time soon, which may or may not hinder the industry’s growth potential.
Across the ocean, things are very different in the US. Federal Reserve sources seem to pay more attention to gold and precious metals. Their dislike of Bitcoin has been well documented, mainly due to a lack of regulatory efforts. That doesn’t mean the overall interest in Bitcoin has declined. In fact, the opposite appears to be true.
Gold vs Bitcoin Debate Continues
For most central banks, two available paths have emerged. Either they create their own cryptocurrency or revert back to gold. Either option comes with advantages and risks. Central bank-issued digital currencies may not bring anything useful to the table. Going back to the gold standard lends more credibility to domestic fiat currencies.
Ever since the US Dollar decoupled from gold, it has lost its official backing. There is nothing giving the Dollar any real value as of right now. Banks, including the Federal Reserve, often criticize Bitcoin for not having intrinsic value. In hindsight, it sounds a lot like the proverbial pot calling the kettle black.
Who will win the race remains to be seen. Both gold and Bitcoin have their merits, value, and appeal. This is a different era of money in many different ways. Competition can come in different forms, yet coexistence will usually yield the best results. Whether or not central banks will see things in the same light, is impossible to gauge.
Should central banks revert back to the gold standard? How would improved fiat currency stability affect Bitcoin and other cryptocurrencies? Let us know in the comments below.
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