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Bitcoin [BTC] critic Agustin Carstens warns against central banks issuing virtual currencies

Biraajmaan Tamuly



Vocal Bitcoin [BTC] critic opposes idea of central bank-issued virtual currencies
Source: Pixabay

Cryptocurrencies and the digital assets ecosystem are often questioned for its long-term credibility and trade functionality. Adding fuel to the fire, a prominent Bitcoin [BTC] critic listed out the risks associated with central banks issuing their own virtual assets, which could result in “huge operational consequences” and undermine monetary policy-making.

Agustin Carstens, the General Manager of the Bank of International Settlements, recently stated that if central banks initiate the launch of their own cryptocurrencies, it would create financial panic among people. The users would transfer their money assets to accounts with monetary authority from established banks, which would undermine the system.

He stated,

“There are huge operational consequences for central banks in implementing monetary policy and implications for the stability of the financial system. Central banks do not put a brake on innovations just for the sake of it. But neither should they speed ahead disregarding all traffic conditions.”

Agustin had previously compared the Bitcoin market to “a bubble, a Ponzi scheme, and an environmental disaster.”

He added that the other potential consequences of using Bitcoin would be its impact on interest rates, which in turn will affect the public’s demand for money, eventually resulting in larger bank balance sheets. This might eventually end up affecting financial market liquidity, he said.

The recent surge in crypto-popularity, hyperinflation of fiat currencies in countries like Venezuela, and the drop of utilization of cash payments in places like Sweden have raised concerns over whether central banks would consider the supplementation of virtual tokens to replace their bank notes.

However, Christine Lagarde, the IMF Managing Director, praised the digital tokens issued by central banks. She stated,

“I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”

JP Morgan Chase previously announced the launch of the first stablecoin under the control of a major bank, earlier this year. The coin was, JPM Coin, was designed to settle payments instantaneously between bank’s customers and users.

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Biraajmaan is an engineering graduate who is exploring the ever-changing crypto verse while traversing his passion for cryptocurrency news writing. He is a Chelsea fan and a part-time poet and does not hold any value in cryptocurrencies yet.


Fall in Bitcoin’s market dominance may be correlated to the fortunes of the altcoin market

Biraajmaan Tamuly



Will Bitcoin's Dominance falter for Altcoins to gain traction in the market?
Source: Pixabay

The trends set by virtual assets have always highlighted the cryptocurrency market’s inherent volatility and spontaneity. Prices lack symmetry and rarely exhibit consistent growth as different factors come into play to dictate an asset’s valuation.

At press time, the world’s largest crypto, Bitcoin, had stormed past the $11,000 mark and was consolidating to push for a surge over $12,000. The rest of the altcoin market however, apart from one or two minor hikes here and there, has been relatively quiet after collectively surging in the early part of the year.

At the beginning of 2019, a significant number of crypto-assets performed significantly well in a group, wherein most assets demonstrated a prominent hike in their values with little to minor price corrections.

A majority of tokens doubled their valuation until Bitcoin breached the $6,600 resistance. Subsequently, altcoins failed to keep pace as Bitcoin continued to test more resistance limits in the market.

Source: Twitter

At present time, Bitcoin enjoyed an unprecedented 62 percent dominance in the cryptocurrency market. As its dominance primes itself to climb over the 63 percent mark, many in the community speculate this could be red flags for the altcoin market.

Major cryptocurrency enthusiasts and analysts have stated that altcoins could significantly capitulate if it so happens. However, past events offer a sliver of hope for the altcoin market.

According to CoinMarketCap, the altcoin market has been significantly affected whenever BTC’s dominance has fallen. During the bull run of 2017, Bitcoin enjoyed a dominance of 65 percent and the global market cap hit a value of $402 billion. However, in January 2018, when BTC dominance plummeted, the global market cap peaked at around $710 billion. The dominance was down by half, whereas the global market cap had almost doubled.

A major reason for the same was money funneling into other altcoins after witnessing a shift in momentum from Bitcoin to the rest of the crypto-market. The present market situation may take a similar path once BTC’s dominance falls, opening the door for other virtual assets to take advantage of the scenario.

However, the present rise of BTC is backed by much more certainty than the bull run of 2017. Hence, a repeat of the January 2018 period may be unlikely, and will happen if and only the market sentiment shifts gears drastically towards altcoins.

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