There’s been much talk this week in the UK about a potential new cryptocurrency backed by the central bank, dubbed ‘Britcoin’.
Other jurisdictions like China, the US, European Union and Japan have also thought about the concept, but no country has yet taken the plunge.
“Revealing just how worried they are about the ongoing epic rise and influence of Bitcoin and other cryptocurrencies, the Bank of England is reportedly set to establish its own digital currency — which they have previously routinely dismissed,” he said.
“If the Bank and government officials believe Britcoin will supersede Bitcoin, they are mistaken. In fact, it will have the opposite effect.”
Green cited 3 big reasons why the birth of such a ‘national digital currency’ would actually drive up the price of Bitcoin.
Validating the existence of cryptocurrencies
Green reckons a rival central bank cryptocurrency would ironically act as a massive endorsement for the existing players.
“In what will be a masterclass in the law of unintended consequences, by jumping on the bandwagon, central banks are validating the concept of Bitcoin and its inherent values of being digital, global, borderless, quicker and more cost-effective than traditional money.”
This newfound “legitimacy” would spur further investment and innovation in the technology, he added.
“The crypto ecosystem will become even more robust, and the pace of mass adoption will be accelerated.”
Central control defeats the purpose of crypto
A digital currency controlled by a sovereign central bank defeats the whole point of “borderless” transactions, according to Green.
“[Britcoin] will still be controlled and manipulated by the Bank of England, meaning they can adjust supply and therefore its value. With Bitcoin, there is no single authority and a progressively limited supply,” he said.
“Why would businesses, such as Amazon for example, in the longer-term favour a currency that is digital but not borderless in the same way as cryptocurrencies are?”
Gen Y and Z’s pathological distrust of traditional banking
Younger “digital-native” people do not trust old school financial institutions, said Green.
“They’ve been influenced by the enormous surge in tech as they came into adulthood, which came around the same time as the global financial crash that hit in 2008.”
He added that those young folks will soon become the recipients of “the largest transfer of wealth in history” via inheritances from baby boomers.
And much of that cash will be parked into non-traditional assets.
“Britcoin will be controlled by a handful of people from the Bank [of England] who have conversations and make decisions behind closed doors,” said Green.
“Bitcoin is controlled by no one and discussions are held out in the open and decisions are transparent and community-based. Which one do you think is the future of money?”
After a recent slump, Bitcoin has gone from about $46,500 to $54,400 this week alone. Ethereum has rallied less dramatically, heading from about $3,000 to $3,120.