Central banks are looking into adopting cryptocurrencies such as bitcoin for transactions, according to the a report on Bloomberg.com.
The financial news website reports that the People’s Bank of China and the Danish central bank are among the national institutions running trials and evaluating the use of cryptocurrencies.
Cryptocurrencies are also referred to as digital currencies and virtual currencies, and they are based on a technology known as blockchain.
Blockchain is a distributed computing system which logs transactions in a decentralised way and is said to be the most secure way to make online payments.
But it’s a new system and given the constant stream of stories about hackers and cyber attacks causing havoc on the internet by stealing users’ account details and even money, there is a lot of wariness around the large-scale adoption of blockchain and cryptocurrencies.
The governor of the US Federal Reserve – effectively the country’s central bank – Jerome Powell said a couple of months ago that the institution is not considering adopting a cryptocurrency.
The cryptocurrency market is growing at a very fast rate. Bitcoin was the first cryptocurrency, but now there are several dozen similar blockchain-based currencies, with more in development.
The People’s Bank of China, for example, has been developing its own cryptocurrency intended for use as payment through Alipay, China’s version of PayPal, and WeChat, China’s version of WhatsApp.
According to an article in HuffingtonPost.com, June 2017 has been a “wild month for cryptocurrency”, with the launch of what’s called “initial coin offerings” – much like an initial public offering of stocks in a company – by two companies.
One, backed by a company called Bancor, raised $150 million, and another, backed by Status.im, raised $275 million. The activity is said to have caused a “flash crash” of Ethereum, a more established cryptocurrency.
The three cryptocurrencies the Huffington Post says are worth watching are:
And while the burgeoning cryptocurrency market creates new coins, long-established banks – the ones most people deal with, rather than the central ones – are increasingly integrating blockchain technology and digital currencies into their offerings.
Barclays, one of the largest banks in the UK, is in discussions with financial regulators about introducing cryptocurrencies.
In an interview with CNBC, Ashok Vaswani, CEO of Barclays UK, says: “We have been talking to a couple of fintechs and have actually gone with the fintechs to the FCA to talk about how we could bring, the equivalent of bitcoin, not necessarily bitcoin, but cryptocurrencies into play.
“Obviously (it’s) a new area, obviously an area we’ve got to be careful with. We are working our way through it.”
And while being able to buy a work of art using bitcoin is not necessarily a guide to the financial future of the world, a London gallery called Dadiani Fine Art says it will accept six of the most well-known cryptocurrencies – bitcoin, ethereum, ethereum classic, ripple, litecoin, and dash – as payment for its art works.
As quoted in Finextra.com, Eleesa Dadiani, the gallery’s owner, says: “We are combining old world business ethics and practice with the new world of technology – the current system is becoming stale and needs to be disrupted.
“Cryptocurrencies will provide a bridge from the elitist, centralist fine art market to a decentralised open source world where many more will be able to become a part of this exhilarating market.
“This could be a turning point for the cryptocurrency market. For many years, it has been ridiculed but when traditional businesses, such as art galleries, take it seriously it is a sure sign that this is a very important technology that will change things as we know it.
“It will also open the market to a new type of buyer, people who regard cryptocurrency as more valuable and stable than traditional currencies. They will become part of an old money market, using new money.”
Buying and selling artwork is listed as one of the 10 most “awesome” uses of cryptocurrency, according to BraveNewCoin.com, although the website does not clearly explain its criteria for awesomeness.
Other allegedly awesome ways in which cryptocurrencies can be used, says Brave New Coin, include:
- “a bloody cup cup of coffee”;
- “travel the world”;
- buying “a fancy car”; and
- “travel to space”.