A former Reserve Bank of India Governor, Raghuram Rajan, is sure Bitcoin and Facebook’s Libra have a solid future if Central banks begin to issue their own cryptocurrency.
Rajan, during CNBC’s “Beyond the Valley” podcast, mentioned that both Bitcoin and Libra currency could be among the most adopted cryptocurrencies when central banks begin to issue theirs.
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He observed that beyond the obvious point that the two cryptocurrencies are competing with the central bank-issued digital currency; they have the potentials of boosting and completely overhauling the whole financial system.
As countries sit to explore the potentials of central bank digital currency, the People’s Bank of China is piloting the ideas with commercial banks across the country, and this may have implications on the tech cold war between the US and China as the country leads in blockchain technology.
Bitcoin is a Speculative Asset, Libra is Meant for Transaction
According to Rajan, Bitcoin is nothing but a “speculative asset” used for transactions on a large scale. Bitcoin is always the next succor of investors each time assets like bonds show abnormal signals.
The economist compared Bitcoin to gold but said it cannot replace the value of Jewelry, which is the only difference between the two.
“It has value because others think it has value,” Rajan mentioned.
He said Facebook is attempting to create a currency for transactions solely. Rajan highlighted that Libra was not designed to be a speculative asset but to be used for transactions alone.
In the future, he opines that Bitcoin may be used as a store of value or as a speculative currency, however, Libra during that period, would be used for the transaction.
Cryptocurrency: China-US Tech War
As the tech cold war between China and the US continues, Ripple co-founder Chris Larsen warned that the US takes action because China is already leading in the fight with the adoption of cryptocurrency.
Larsen, in an op-ed, said China is already dominating the finance and cryptocurrency war and this could affect the US in the nearest future.
The Ripple co-founder said that the US dollar’s power, over the rest, could be reduced by China’s action to lead in the adoption of cryptocurrency.
According to the University of Cambridge Center for Alternative Finance, beyond China’s decision to launch its cryptocurrency which is already in the pilot stage, close to 70% of crypto mining happens in China.
Once, Ripple CEO, Brad Garlinghouse had said just four miners in China controls 80% of Bitcoin mining power.