Germany doesn’t appear to like crypto all that much.
Will Crypto Negatively Affect the Financial Markets?
In a recent statement, Deutsche Bandesbank president Jens Weidmann commented that bitcoin and other forms of crypto have the power to “destabilize financial systems” and “worsen bank runs.”
While this argument has been heard before, it reflects a growing fear amongst many traditional financial institutions in the sense that bitcoin and other forms of crypto work in a completely opposite way. Banks, for example, have total control over the financials of their customers. If you need a loan or to open a line of credit, you must approach your bank and be subjected to the terms and conditions it has set in motion. If, for whatever reason you cannot adhere to those terms, your financial situation can be completely controlled and manipulated by the bank in question.
This creates a serious problem in that it potentially divides the financial well-being of citizens far too much. For instance, everyone has the need to access money and credit. Without these tools, they cannot garner the services and goods they require to survive. However, their inability to work with banks could potentially get in the way.
Cryptocurrencies, on the other hand, put financial freedom and independence back in the hands of the people they serve. There are fewer terms that the people must adhere to. If they require a service or a specific item, a cryptocurrency can potentially be used to gain access to whatever it is they need. That is what cryptocurrency was originally designed as; a method of payment. While it currently stands as an investment or nest egg for some, its original goal was to potentially replace cash and credit as a means of paying for both goods and services.
Weidmann expressed the following when it came to cryptocurrency:
Some argue it could be run on a distributed ledger. In such a case, it would replace or complement reserves at the central bank with a restricted-access digital token… A token would be a bearer asset, meaning that during the transaction, the sender would transfer value to the receiver without intermediaries. This is something fundamentally different from the current system in which the central bank debits and credits the accounts without transferring actual values.
You Can’t Be Right All the Time
Basically, Weidmann appears to be expressing the idea that bitcoin and digital currencies bear no value as money. This is the same argument presented by mega-financial figures such as Warren Buffett, but is it possible the argument is wrong?
Justin Sun, the CEO of Tron, recently commented that while he has great respect for men of Buffett’s stature, it’s unlikely that they’re always on the money when it comes to deciding what makes a solid investment and what doesn’t.
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