Cryptocurrency could replace the pound: but how and when?

WITH CRYPTOCURRENCY going from strength to strength, despite reports over bubbles bursting and markets crashing, many people are looking to the future.  

Bank of England boss Mark Carney has recently stated that the US dollar could lose its place as the global standard. The governor also claims that a single, digital currency may be a viable replacement.  Carney further stated that the dollar is under threat of technological issues. This, he argues, is why many people have turned to online transactions.

The governor’s words have created a debate in the financial world. Experts have claimed that cryptocurrency such as bitcoin and ethereum could overtake physical money in the future. While the same experts claim that we are many years away from this occurring, there are no signs of crypto disappearing any time soon.

The weaker pound

The British pound has fallen in value dramatically over the past few years. The currency’s market rate has dropped and risen thanks to ongoing uncertainty with regard to Brexit. While some experts claim that this will settle once the UK leaves the EU, others are keen to suggest a move to a digital platform.

The pound is in something of a weak position, despite holding firm over other currencies. Carney did not mention the British currency in his recent statement. However, some may infer that the UK – and not just the US – may be affected by crypto’s steady rise.

The bigger question is, of course, whether the British public is ready to switch to digital currency for good. A complete switch from coins to code may not be in the wider interest for decades to come.

Rising investment

This, however, hasn’t stopped British citizens from getting invested in cryptocurrency. Despite press claims that the Bitcoin bubble was about to ‘burst’ in 2018, the currency remains as popular as ever, if as volatile. There are many appealing traits to Bitcoin that have led some UK citizens to make the full switch to digital currency already.

One of the main benefits of bitcoin and crypto, it is suggested, is a lack of regulation. This, to everyday users, means that there are no ties to public banks, and the money-making and spending processes are fairly anonymous. However, it is this exact lack of regulation that may be holding crypto back from rising up so quickly.

The FCA published a clarification earlier this year that states that the board regulates some but not all cryptoassets.

“This is a small, complex and evolving market covering a broad range of activities,” the FCA’s strategy and competition director Christopher Woolard stated on 31st July 2019. “Today’s guidance will help clarify which cryptoasset activities fall inside our regulatory perimeter.”

It is clear that moves are being made to try to control crypto. However, with even the FCA advising that the market is evolving, the end product of such controls will remain to be seen.

Does Facebook hold the key?

During Carney’s discussion of global digital currency, speculation turned to Libra, Facebook’s proposed debut into crypto. Mark Zuckerberg’s firm has been developing Libra in the public eye for some time. Speculation continues to run rife over the effects that Libra will have on world currency, the pound included. Regardless of what occurs in the future, however, Carney is clear that some form of regulation will need addressing.

Carney has referred to the idea of a global digital currency as “intriguing”. With Facebook serving over two billion users at the time of publication, the social network is in a prime position to flood the crypto market with a new, accessible digital medium. This could threaten not only the British pound but also other global currencies.

However, take-up and widespread interest in the currency remains on the horizon. Facebook is continuing to recover from a tumultuous 2018, when the firm faced negative press over privacy issues, particularly relating to data shared with political consultancy Cambridge Analytica.

Cambridge Analytica has since closed down, but this story, alongside other security issues that Facebook revealed last year, remains raw in many people’s minds. Whether or not British people adopt Libra in light of these problems will come to light in the next few years.

Why should the British pound be replaced?

Carney’s suggestion of a global digital currency will have excited many people but may have frightened others. Many people will want to keep physical currency on hand due to its clear paper trail and regulations. Others will want to switch to digital to avoid such curtailment.

British crypto traders are already making use of various exchanges and networks to prepare for the future. Reports show that getting started is simple. Traders can simply set up a digital wallet, find a trading platform such as Bitcoin Future or Bitcoin Code, and invest physical money. For example, an aspiring investor could read a quick Bitcoin Future review and set up an account within minutes.

Cryptocurrency is exciting to many people. It is easy to get into, and with negative press surrounding banks in recent years, it is becoming a more ethical option for British citizens. The main drawback of switching from physical to digital currency, at present, is the volatility of the medium. Most crypto investors embrace the unpredictability of the markets. However, traditional banks and experts will likely argue that this is not a stable footing for British, or global, finances to be built upon.

When will the British pound be replaced?

At the time of publication, there is no sign that the pound is due for replacement at all. The pound has weathered Brexit so far, though there have been no big moves to suggest that the currency be upgraded or scrapped.

However, Carney’s suggestion of a global digital medium could be prophetic. It will be some time before traditional banks, and the FCA, can usher crypto into the mainstream, if at all. For the time being, it is a profitable alternative for many British people.

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