Kelly Robertson
Most governments all around the world are still unsure what to make of Bitcoin. Some of them are trying to ban it, most are ignoring it (while still allowing its use), and some are even looking to jump at the opportunity.
Australia is one of those countries which may be turned into a Bitcoin paradise, as we’ve reported before. There, Labor and Coalition senators are crossing the political divide to call on the country’s Reserve Bank to embrace bitcoins as an official form of currency with the idea to secure the future competitiveness of Australia’s $145 billion a year financial services industry.
But Australia is by no means the only country looking to ride the “Bitcoin wave”…
Enter Canada…
In Canada, we don’t get signals for Bitcoin’s adoption from the country’s representatives. Instead, we have Bank of Canada’s research consultant Warren E. Weber proposing a financial system that would use Bitcoin as the standard currency instead of the fiat currencies.
Weber created a 37-page long report (pdf download) to examine the similarities between the gold standard and what he refers to as “Bitcoin standard.”
Among the things he noted are the absence of control of central banks or monetary authorities for both gold and Bitcoin, as well as the limited supply of both “goods” (if we can call them like that). For what it matters, we have also noted these similarities in our article comparing Bitcoin to traditional money.
Furthermore, the report showed that like gold, there will also be three distinct media of exchanges under the Bitcoin standard: Bitcoin would become the main currency, while there will be fiduciary currencies that will be issued by the central banks of different countries, as well as fiduciary currencies like banknotes or deposits that will be issued by commercial banks.
What about benefits?
When it comes to economic benefits of adopting the Bitcoin standard, Weber thinks that it would help people forecast the price level of the digital currency more easily due to the “known, deterministic rate” at which the cryptocurrency is established. This in turn will make hedging against fluctuations in the currency exchange rates obsolete — or at least not as needed — making more money available to be used more productively.
However, Weber is not confident the Bitcoin standard will become a reality due to the expected heavy opposition that will be raised by central banks and governments around the world.
“If the Bitcoin standard becomes real, neither the governments nor the central banks will be able to implement interest rates to affect their economies, neither could they generate seigniorage revenues obtained from their ability to almost costlessly create money,” he wrote.
Conclusion
Chances are Canada and Australia won’t be the only countries looking to take advantage of Bitcoin and other cryptocurrencies. Nevertheless, we are not anywhere close to seeing Bitcoin replacing the traditional fiat currencies. And that’s not necessarily the bad thing as such a move would make these digital assets more stable, hence leaving less room for money-making investments into the space.
We are now in the “wild west days” of the cryptocurrency market, and we should appreciate it as much as we can. This is one of the very few moments in history when big fortunes could be made. It is totally up to you to decide whether you want to join this revolution or sit on the sideline…
