After the initial buzz of the cryptocurrency Bitcoin and many others, thoughts turn to their future. Some have speculated that eventually they will all be outlawed – even unconstitutional. It is the view of many, that cryptocurrencies are the realm of anonymous people wanting to do nefarious financial mischievousness (drugs, illegal transfers, etc …). Still, others believe, that they are just speculative trading vehicles, watching the prices skyrocket, crash and only to then rise again. We won’t go into the benefits of cryptocurrencies here, but here’s a link that will give you some idea of cryptocurrency benefits. So News Forecasters asks, what is the future of cryptocurrencies?
Are cryptocurrencies legal? The U.S. Constitution contains only two sections dealing with monetary issues. Section 8 permits Congress to coin money and to regulate its value. Section 10 denies states the right to coin or to print their own money. The framers clearly intended a national monetary system based on coin and for the power to regulate that system to rest only with the federal government. The monetary system that prevailed throughout most of the eighteenth and nineteenth centuries up until the Civil War comprised a hodgepodge of different types of money. Circulating money consisted of specie, coins minted by the government; privately minted coins; certain foreign coins; and paper banknotes issued by state-chartered private banks and backed by those institutions. Other countries as well have had their historical issues with coining money, we won’t go into those here, but the main issues are similar to the U.S.
The constitution doesn’t say it shall have the exclusive power to coin money, there have been alternative currencies in the US for years, like Berkshares or Disney Dollars. And a more famous version; the Tenino wooden currency that was printed during the great depression by a small town in Washington. The power to regulate includes the power to not regulate. Remember in September 2017, the JPMorgan Chase & Co. chief executive officer Jamie Dimon famously called Bitcoin a “fraud” and threatened to fire any employee caught trading it. Basically saying it would be eventual declared illegal – how could an economy work with private money? So News Forecasters’ view is that cryptocurrencies can be legal if governments allow them. Here is a link that shows regulation of cryptocurrencies around the world. So perhaps a better question is, will governments allow cryptocurrencies and could they stop them in any case?
To answer the question can governments stop cryptocurrencies, News Forecasters’ view is that governments can’t fully control the use of cryptocurrencies. For sure they will try. Since much of the global economy goes through large corporations it does give them a controlling point. However, on a person to person basis, it will be virtually impossible the stop. This will be particularly true in areas where governments do not have the infrastructure to control, such as in the second and third world countries, where local government-issued currencies are dubious at best. So the strategy will be; instead of blocking the future, embrace and control.
To answer the question will government allow cryptocurrencies, News Forecasters’ view is that the cryptocurrency space will be divided into two basic areas. Cryptocurrencies that are approved by the government and those that are not. Cryptocurrencies that are not approved by the government will be used by folks wanting to remain anonymous and engaged in the various potentially nefarious activities. Is this space, there will be a few cryptocurrencies that will become the vehicles of choice, but it will become wild and woolly and it will be, buyer beware. A cat and mouse game with authorities. Fortunes will be won, lost or stolen. For most, it will be hard to convert unapproved to approved cryptocurrencies or to government-backed hard currencies.
News Forecasters believes that at some point in time, in the developed world especially, governments will pass comprehensive cryptocurrency legislation (next 5 years). For a while now, governments have been declaring war on cash – primarily for legal control and taxes. Most likely most governments will be issuing their own cryptocurrency (via central bank control), that will be a one-to-one conversion to what we call cash today, thereby winning the war on cash – cash will never completely go away, it just won’t be accepted by many merchants.
In the approved non-governmental cryptocurrency space, News Forecasters believes that it will be primarily dominated by large corporations (i.e Facebook’s Libra – banks and payment processors will move in quickly to the space) and a dozen or so nonprofit organizations (i.e. BitCoin). These cryptocurrencies will be regulated and have sufficient convertibility to government cryptocurrencies. The approval and regulation processes will be heavy.
So the good news is, cryptocurrencies are here to stay, though as the industry matures it will become a more difficult space to play in for new entrepreneurs.
A video presentation of this subject: