Bitcoin Isn’t a Currency

Hélder Rosalino, the governor of Portugal’s central bank, Banco de Portugal, lately spoke to Portuguese publication ECO about bitcoin, digital currencies, blockchain, and financial technology in general. To Hélder Rosalino, it’s essential that people know a digital currency isn’t a currency to Portugal’s central bank. To the financial institution’s governor, a currency needs to each store value and have the potential for use as credit. Consistent with Hélder Rosalino, while a central bank issues currency, it’s developing a legal responsibility on its stability sheet that needs to be paid.

Hélder Rosalino stated:

“A currency, to be categorized as such, needs to have essential characteristics: the first is to associate itself with the concept of store of value, then, on that currency there ought to be a proper to credit. When a central bank creates a currency, it creates a legal responsibility on its stability sheet that needs to be paid. If, someday, everybody was to hand that currency over to their banks, than the central bank would need to pay, and the legal responsibility might be removed.”

Bitcoin

To the central bank’s governor, Fintech’s benefits are simply technological, as he sees superb capacity in blockchain, and not in digital currencies like bitcoin. He noted that a digital forex isn’t issued by a critical bank, neither is it regulated by any economic organization that offers it the proper for use as credit. As such, Hélder Rosalino concludes that a digital currency isn’t a currency, but acknowledges that it has great disruptive capability.

Hélder Rosalino said:

“A digital currency is a convention, an automated solution based on effective technological base, a great network, the blockchain, which permits payments without intermediation. It permits me, through a digital currency, to make peer-to-peer transactions without brokerage outside the economic system. However, it isn’t a coin, so we look at digital currencies with issue and warning because, spotting the disruptive innovation related to them, there are numerous dangers.”

While asked about the dangers related to digital currencies, Hélder Rosalino pointed to its speculative dimension. To the central bank governor, as digital currencies like bitcoin are generated via mining, and as its quantity is limited, demand surges and speculation ensues. The growth in demand results in a second issue, volatility. In line with Rosalino’s words, volatility related to digital currencies is just too high, and it’s the central bank’s duty to train and defend clients.

Hélder Rosalino

Rosalino’s final feedback were on counterparty dangers, as on most bitcoin transactions it’s almost not possible to inform who’s on the other side. Additionally, the central bank’s governor mentioned legal worries as he warned it cannot be possible to exchange a digital currency for a currency general by regulators and central banks. Hélder Rosalino cited that digital currencies are under the penal domain’s interest because of the danger of fraud and money laundering. Central banks are nonetheless going via a studying phase on a new fact, that’s being evaluated.

His words come at the all in which bitcoin hits a new all-time high above $7800 as the SegWit2x hard fork was called off. After reaching new all-time high the digital currency’s rate has fallen to the $7200 degree following a sell-off from Bitcoin2X expecting traders.

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