Published by CasinoTopsOnline on March 4, 2015 in Industry News

BitcoinsThe global financial market is looking at cryptocurrencies with renewed interest after are several international markets, including the United Kingdom which while it has a powerful currency is clearly an ailing economy, announced they are looking to digital currencies for stability and economic growth.

Where alarmists are calling it the end of the age and sensationalists are crying “the future is here” the reality of the research performed by the Bank of England in its “One Bank” research paper supports neither of those positions.

Looking at the historical evolution of transactions, and adding to it the blatant failure of the existing system they have looked at digital currency sector and asked if it has the potential to create a world of relative financial and economic stability. The answer is a resounding “maybe”.

Of the cryptocurrency charge, led by the likes of Bitcoin, Central Bank found that: “Digital currencies, potentially combined with mobile technology, may reshape the mechanisms for making secure payments, allowing transactions to be made directly between participants.” 

Also that “while the monetary aspects of digital currencies have attracted considerable attention, the distributed ledger underlying their payment systems is a significant innovation.”

In the modern world international transaction are commonplace for both major corporations and the average Joe. Digitising these transactions means massive cost savings, however a “cost saving” for one often means “loss of profits” for another.

Consider a business such as Western Union, digital transacting will make them obsolete leading to losses in jobs, financial losses for investors and ultimately mean less money circulating in the economy.

Banks themselves will feel the pinch from the loss of revenues generated by international financial controls and conversions. Will they surrender their profits, especially considering the time and cost implications of mainstreaming digital currencies.

The One Bank report likened the mainstreaming process to the creation of the internet: “creating such a system would entail creating a protocol for value transfer over the internet, akin to what Berners-Lee (1989) did for information.” 

They claim that this new transaction vehicle “draws on advances from a range of disciplines including cryptography (secure communication), game theory (strategic decision-making) and peer-to-peer networking (networks of connections formed without central co-ordination).”

This will clearly require staff with specialised skills and backgrounds, which will have severe financial implications.

Finally a large part of the cryptocurrency appeal is the user’s ability to remain anonymous and gain control over how they use their hard earned money.

This “stick it to the man” mentality is the catalyst behind the meteoric rise of Bitcoin based online casino operations. However should digital currency transacting become the method of choice for governments and banks these key items will fall away, with draconian financial – and gambling - controls once again being set in place. 

The real danger it would appear is not from digital currencies but rather what will happen to digital currencies when, in the pursuit of profits (by the banks) and control (by the juristic bodies) we simply end up recreating a digital version of the current failing system.