[Bit]coin flipping: Is bitcoin headed for an internal civil war?
A new wave of bustle has hit the banking industry after a report showed that disruptive forces could change the face of this industry in the decade ahead. All bets are off now.
A new report by the Deloitte Center for Financial Services has painted a rather bleak scenario for the banking industry as it states: “The question is not whether the disruptions that we are witnessing today will transform banking and capital markets, but, rather, how will they do so?”
To answer this question, the Deloitte report examined exactly how different disruptive trends in areas such as blockchain technology, cryptocurrencies, artificial intelligence and machine learning, as well as customer experience are coming together to impact the future of banking. One of its findings suggested that the transaction volume of blockchain payment systems will increase significantly by 2020 while another stated that digital currencies (bitcoin included) will go mainstream. However, it also warned that a large number of alternative cryptocurrencies will probably disappear or be replaced by state-sponsored digital currencies.
State-sponsored digital currencies trend gaining momentum
The idea that bitcoin will drown in a sea of state-sponsored digital currencies is not far-fetched since China’s central bank is flirting with the idea of launching its own digital currency. According to a statement posted on the central bank’s website earlier this year, implementing its own digital currency might help “reduce the high costs of circulating traditional currencies, boost the convenience and transparency of transactions, reduce money laundering, tax evasion and other criminal acts.”
Ecuador became the first country to launch its own digital cash after banning bitcoin and decentralized digital currencies. The National Assembly explained that its personal electronic currency would be backed by the assets of the Central Bank of Ecuador and ignored the open letter from the country’s biggest bitcoin organization, La Comunidad Bitcoin Ecuador, which urged the legislature to respect the rights of consumers when creating a new digital currency.
Australia is another country which may have its own digital currency in the future as Tony Richards, the Head of Payments Policy from the Department of the Reserve Bank of Australia acknowledged that bitcoin has stimulated “interest in the potential offered by distributed ledgers.” Although he emphasized that the Bank is not actively considering this option, Australians might see a digital version of the Australian dollar someday.
Bitcoin on shaky ground
As the idea of state-sponsored digital currencies is gaining momentum, one cannot help but wonder what will happen to bitcoin. After Mike Hearn, a former bitcoin core developer, announced that the cryptocurrency is a failed experiment, the bitcoin community tried to find a way forward. As a result, this cryptocurrency split in two; the core development team chose one direction and a group which consists of miners, startups and exchanges decided to create Bitcoin Classic and Bitcoin Core. Although they stem from the same source code, they are controlled by different groups of programmers and have different roadmaps.
Although Mike Hearn created quite a stir with his statements, Valery Vavilov, the co-founder of BitFury, explained in a blog post on Medium that he continues to believe in this cryptocurrency because he believes in democracy and in open societies. “A key feature provided by decentralization is permissionless entry for users and developers —and it is thanks to this component that bitcoin has grown into much more than a currency and has become a platform for blockchain innovations,” he added.
It remains unclear if bitcoin would continue to thrive or if the new state-sponsored digital currencies would cripple this cryptocurrency, but nobody wants to surrender just yet.