South Koreas central bank has published a new working paper analyzing a dual-currency regime by pitting cryptocurrencies against traditional fiat currencies. Fiat currencies have been historically known to decrease continuously, the authors confirm, due to inflation and the factor of new money pumped in to the supply by the central bank, also known as quantitative easing. Bitcoin, in stark contrast, has a fixed supply which would imply a deflationary bias, the authors note. However, security or trust issues the decentralization of digital currency and the absence of insurance provided by governmental authorities may prevent digital currency from being used as a store of value. Instead, digital currency may be used as a medium of exchange dominantly.
Do you agree with this research result?
The outcome of this report is very on point which is something that have been subject to discussion even on this forum several times. Bitcoin has its advantages which has equally enumerated but the concern is the regulation as well the security because his do a company guarantee my returns if I keep my btc with them? In a case where there is crash in the price of bitcoin how do they even account for such losses? How do government even regulates the activities of such entities considering the anonymity. These are issues that are very much valid in which I believe are still standing in the way of bitcoin.