An interesting issue in his article was raised by journalist Simon Chandler. In the text that was published on Crypto News, stated that Bitcoin is to a greater extent “public money”Than the currencies we use every day. Sounds surprising? Let’s get acquainted with his thoughts.
Let’s start with what public money is. It is money that serves and is created by society. So every central banker is partly right: fiat currencies can be “public”as long as they are created and managed by institutions which are accountable to the public. At the same time, cryptocurrencies can be “private”, as critics often describe them.
As Chandler noted, “many people working in the cryptocurrency industry strongly argue that citizens have more influence on the development of cryptocurrencies than on fiat currencies. “
It is not difficult to find examples of central banks using the terms “public money” and “private money”. In a speech in June by Christina Segal-Knowles of the Bank of England, both are mentioned, that the money issued by the bank is “public” and that almost everything else (including money issued by commercial banks) is “private”. “
– adds the journalist.
A similar distinction was made by the International Monetary Fund and defined public money as “Completely safe”. By implication, explaining that their private counterparts – i.e. cryptocurrencies – are less secure.
In turn, Fabio Panetta from the European Central Bank, presenting the definition of public money in a speech in November 2020. said he is:
A public good that central banks have managed for centuries in the public interest and that should be available to all citizens to meet their security needs.
Theory and practice
The above descriptions and opinions may not appeal to cryptocurrency fans. Certainly many will criticize the view that Fiats are “completely safe”. Actually, any historian will also question it. The history of our civilization is not only a series of wars, but also economic crises and the constantly recurring hyperinflation that destroyed citizens’ savings.
In addition, controversy – especially today – may arise from the sentence that fiat currencies are managed “in the public interest“And are supposed to be”accessible to all citizens to meet their security needs“. This assessment is somewhat inconsistent with reality. Continuous reprinting is hardly a good thing, especially for the middle class. And this is not a problem of the 20th and 21st centuries. The Roman Empire fell, among others as a result of spoiled coins. In the Middle Ages, rulers competed to deceive their subjects through the process of impoverishing the currency of gold composition.
In the case of cryptocurrencies, the situation is different.
A cryptocurrency that is built using open source code and does not provide its founders with any exclusive benefits (…) (as is the case with Bitcoin) is definitely more of a public good than central bank currencies, where a centralized agency has an exclusive, direct control over emissions and price
– this is the opinion of Nishant Sharm, founder and CEO of BlocksBridge Consulting, a mining consulting company.
In other words, Bitcoin can be a more pro-social asset than the dollar, euro, yen, or zloty, which are instruments in the hands of central bankers, governments, and maybe even lobbyists.
Governments decide how to manage the fiat currency, and the public has little influence on politics [monetarną]. On the other hand, “private currencies”, if decentralized (like Bitcoin), are managed by the community, giving “public” control
– says Lou Kerner, CEO of BIGtoken.
Chanlder adds that “If you are a developer, nothing prevents you from submitting an update proposal for your favorite cryptocurrency, and if the wider developer community likes it, it will be approved and implemented. It would certainly be very difficult to do something similar for “public” money issued by a central bank. “
Who is right in this dispute? Everyone should answer this question for themselves. After all, with good reason, cryptocurrencies are considered by some to be a new form of money and another link in the chain of changes taking place in the world of economics.