After having long despised cryptocurrencies , governments now seem to be taking a keen interest in them. The magazine Capital recently revealed the plans of Bercy and the European monetary authorities for the creation of a state cryptocurrency.
These are reacting to the growing popularity of private currencies like Bitcoin and to the desire of big players like Facebook to launch their own trading instrument. Should we welcome the change in mentality of the ruling class vis-à-vis crypto-assets? It all depends of course on his intentions.
At first glance, the idea of a state-owned cryptocurrency running on blockchain technology seems strange. After all, Bitcoin, the most illustrious of cryptocurrencies, was created to allow holders of currency to escape the discretionary manipulation of official trusted third parties that alter the value and quality of their instrument of exchange
Claiming blockchain technology and cryptocurrency status is therefore not enough to obtain a certificate of respectability. In fact, of the 2,000 crypto-currencies in circulation, many are rightly considered scams by crypto-asset enthusiasts.
THE PROMISE OF BITCOIN
It is not the blockchain that is the basis of the quality and the main competitive advantage of Bitcoin. Rather, it is the almost unalterable promise enshrined in the Bitcoin protocol that the money supply will not be susceptible to inflationary manipulation.
Bitcoin's "monetary policy" is readable and predictable. Bitcoin holders know that the number of BTC will not exceed 21 million units (Figure 1).
By mimicking the modalities of issuance of metallic currencies, Bitcoin imposes itself a strict rarity and becomes a serious candidate for the function of store of value where official currencies are administered by inflationary central banks (figure 2).
Figure 1: Evolution of bitcoin's money supply
Figure 2: Evolution of the dollar's money supply since 1960
Of course, Bitcoin's inherent scarcity does not exempt it from one-off or lasting volatility and depreciations. But the stability of the supply of BTC ensures that the evolution of the price of the cryptocurrency is exclusively due to variations in demand. Unlike official currencies, the fate of Bitcoin is in the hands of its users.
It is in this sense that state cryptocurrency projects should be viewed with caution. If they were to emerge, public cryptocurrencies would be administered by central banks with discretionary power over the money supply. Where Bitcoin was designed to avoid the risk of arbitrary inflation and safeguard the purchasing power of holders of currency, this would not necessarily be the case with public cryptocurrencies.
THE FANTASY OF THE CASHLESS SOCIETY
Worse still, reflections on the digitalization of official currencies today tend to overlap with the fantasy of a cashless society, promoted in the name of the need to strengthen the capacity of central banks to manipulate the behavior of savers and consumers.
In their war against savers, central bankers and their intellectual backers fear that a more aggressive policy of taxing savers via even lower interest rates will lead them to hoard cash.
Researchers affiliated with the IMF noted that the existence of cash imposed a certain limit on so-called “ultra-accommodating” monetary policies. A limit that some want to lift ...
In this hypothesis, a public cryptocurrency would have a purpose diametrically opposed to Bitcoin. Where the first private cryptocurrencies were envisioned as an instrument for restoring the sovereignty of the saving consumer, public cryptocurrencies risk being used to destroy it permanently.