The Bank of Finland has released a paper explaining why the country’s central bank regards cryptocurrencies as a “fallacy”, writes Cointelegraph.
The paper, reading like a film title and dramatically called the ‘The Grand Illusion of Cryptocurrencies’, was written by Aleksi Grym, whose improbable role at the bank is ‘Adviser on Digitalization and Head of the Digital Central Bank process in the Financial Stability and Statistics Department’.
Grym’s paper suggests that DLTs are no different from other record keeping systems and cryptocurrencies as they demonstrate how poorly understood money is today as a concept. It claims that they muddle “our sense of fact and fiction”.
“For all intents and purposes, that ledger is a centralized ledger. The fact that there are multiple synchronized copies of it, distributed across a network, is irrelevant, as each one has the same data,” it argues.
He adds, erroneously, that cryptocurrency is “unrelated to the fundamental characteristics of money”, as money functions as a unit of exchange, and has a store value which digital currencies such as Bitcoin don’t.
The report bases its findings on several studies of cryptocurrencies conducted by Finland’s central bank, siding with the “speculative bubble” theory; a term used by many Bitcoin detractors elsewhere to argue against its adoption. Grym adds that a CBDC would be tantamount to a bank account at the central bank. Money, he argues, is created from “liquidity transformation”, not thin air.
The article reflects some legislators view that cryptocurrency is used for criminal activity or is security against “real or imagined” state oppression, or even simply the thrill of trading.
Bitcoin and digital currencies have had numerous detractors over past years, but perhaps not so blatantly at the state level, with perhaps the exception of China. Popular media has played a fundamental role in this.
As Gareth Jenkinson, writing for Cointelegraph, recently pointed out, accuracy, for one thing, is out of control often allowing subjectivity taking over its place. In this way, he writes, “cryptocurrency has forced its way into the minds of the masses” but usually through the popular media, damaging the fundamental truths about Bitcoin and cryptocurrencies in the process:
“The spin, positive or negative, will be dependent on how the sector grows and addresses its own shortcomings in order to build trust and understanding in the global community”.
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