Philly Fed Chief: Bitcoin Has Little Chance of Thwarting Monetary Policy
Recent article from CoinDesk that I thought was kind of funny.
According to Harker, "The paper that's in your pocket, that we call money, only has value because we believe it has value, because we believe the government stands behind it. It's all trust issues... "And so, when cryptocurrencies and other forms of currency emerge, I think the basis of that has to be how do they create that trust?"
Prime example of someone that only considers the surface meaning of something new. Completely misses the point that the blockchain in general is a trustless instrument. The question is, do you trust the paper in your pocket - more importantly, do you trust the assets you hold in various financial institutions or markets such that you can liquidate them to usable currency in the case of "bad times". To give a more fair analysis, though, I think blockchain technology may still carry some risks including domination of hashing power, domination of large percentage of coins, etc. Though, I still need to understand these risks better.
He goes on to discuss that if cryptocurrencies have largely been untested - I think it's a good point - how would cryptocurrencies respond if the general market became very bearish? The crypto market has not faced a general bear market in stocks, for example. It will be very interesting to see how this will unfold. However, upon liquidation of stock assets to fiat, how might people want to utilize that? In poor economic conditions, presumably for daily necessities. But for those that wish to/can continue to invest, how might they do it? Emerging markets? Gold? Possibly. The US dollar? I doubt it, with interest rates as low as they are. If I had to bet, I would say that crypto market might initially decline with the overall market in coordinated fashion, but would bottom and recover much sooner than you may think. Food for thought
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