Blockchain technology too primitive to issue a national e-currency
Blockchain technology is too primitive to issue a state digital currency, according to Thomas Moser, the board director of Swiss central bank. He compared the current condition of blockchain technology to compact discs.
Switzerland is a cryptocurrency-friendly country, famous for the crypto valley in Zug which has a number of blockchain investors. The country was ranked first in a list of top European countries for launching a Blockchain company. The city council of Zug is notable for accepting payments in bitcoins. Even though Switzerland has started using cryptocurrencies, Moser argues that Blockchain technology is too primitive.
While speaking at the Crypto valley blockchain conference in Zug, he admits the technology has potential. However, he believes it’s only possible when it “looks very different from what it does today,” local news outlet swissinfo.ch reported. For the current state, he says he cannot envision an ‘e-franc’ anytime soon. Speaking at the same conference Swiss federal council Schneider-Amman said that the country did not know enough about the risks posed by cryptocurrency. Therefore, expanding the education on cryptocurrencies is necessary.
He argued that the technology had the potential to build a nationalized e-currency but must be developed further.
The concept of national e-currency dates back to 2013. Venezuela is the first country to launch a nationalized cryptocurrency, Petro. However, crypto asset experts do not consider ‘Petro’ as a real cryptocurrency as it isn’t decentralized. Iran, Turkey, Russia and several other countries are also amidst talks of introducing their own cryptocurrencies this year.
One of the reasons national cryptocurrencies are issued is because it can improve financial sovereignty of a country. However, a nationalized cryptocurrency has many challenges which range from legal issues to cybersecurity concerns. Vitalik Buterin writes, “The problems in a crypto economy are much more difficult to formulate than the actual economy. Large-scale experiments are required to understand and resolve a problem”.
The Atlantic reports that blockchain could further consolidate the centralized power of corporations. Since cryptocurrencies require large computer power it needs more capital and physical infrastructure to support it. These burgeoning costs can inspire a centralized authority. Blockchain was introduced to have a decentralized system of transactions but instead, it might lead to a unification of corporate giants controlling the digital market.
Image via shutterstock
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