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Are digital currencies/cryptocurrencies really serious?

Bitcoin is just one of many different cryptocurrencies, there are many, and the number is growing inexorably, as if their expansion and use is inevitable. Haydn Jones in his CTMfile article Credit where credit is due on the IMF’s discussion note on Fintech and Financial Services: Initial Considerations  described  “Digital currencies are the next central bank of the internet”. 

In her interesting article in gtnews - How can treasurers use cryptocurrencies? - Victoria Beckett wrote that bitcoin “is moving out of the realms of the dark web and into the light as it becomes increasingly accepted in the main stream.” And that. “There are several benefits to treasurers using cryptocurrencies. These include avoiding paying large transactions fees to banks, immediate payments and the ability for transactions to be kept open or private, so the business interests can be still followed.”

But many important questions remain, including:

  • Will central banks really allow their currencies to be replaced? Will they set up their own cryptocurrencies?
  • Will cryptocurrencies ever be fast enough to be used in mass payments?
  • How will authorities react to losing their control over the money supply?
  • Will fraud really boom if payments become untraceable?
  • Will cryptocurrencies really eliminate transaction fees? 
    • Coinbase, a mainstream digital asset exchange website, say that conversion fees (transaction fees)  will be paid by their customers. Not only this, “Fees will be assigned dynamically based on the current network conditions and will be paid by customers when they send an on-chain transaction.” While intra Coinbase transactions will continue to be off-chain and free. (This sound very much like a bank talking, there are basic costs that have to be covered in any system.)
    • Payments services provider Circle is offering its customers in the US, UK and Europe the ability to send and receive money across borders with no fees and no mark-up on foreign exchange (FX) rates. (But the payment is part of a wide transaction based service which generates income_
  • How long will it take for consumers, SMEs and MNC to really accept cryptocurrencies? 

CTMfile take: Cryptocurrencies will have an impact on cash management, but where and how is not at all clear?

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