Central bankers are being warned by researchers that the crypto revolution will overtake the system they are in-charge of preserving. Recently, British economic historian and author Niall Ferguson told the Bank of England that Bitcoin is the financial system of the future.
The Future of Finance
Niall Ferguson is a noted historian, commentator, and the author of fifteen books including The Ascent of Money and The House of Rothschild. On Tuesday he has given a seminar to the Bank of England, talking about the 2008 financial crisis and the reactions to it to this day. In his conclusion of the subject, he mentioned that bitcoin is part of the major challenges ahead for the current fiat-based system.
Ferguson said: “The financial system of today is not fundamentally that different than the financial system of the pre-crisis period, except that big banks are better capitalized. I don’t think much else is really different. The novelties, the things that will really matter ten years hence are still relatively small in scale. Whether its bitcoin or cryptocurrency generally or the massive revolution in online payments that is being achieved by the big Chinese tech companies, that’s the financial system of the future, and it is still small enough not to be systemically important in 2018. In short, I am left feeling we are only a matter of time before the next crisis.”
Bombarded by ICOs
The above isn’t such a surprising statement coming from Ferguson. Back in December 2017 he wrote: “At some point, no doubt, regulatory changes in the US will deflate the current bitcoin bubble. But they will not halt, much less undo, this financial revolution. Think about it this way. The maximum number of bitcoins that can be created is 21m. The number of millionaires in the world, according to Credit Suisse, is 36m. Their total wealth is $128.7 trillion. If millionaires collectively decided to hold just 1% of their wealth as bitcoin, the price would be not $15,000 but north of $60,000. If they raised that to 5%, the right price for bitcoin would be above $300,000. I am not saying this is certain to happen. I’m just saying my teenage son thinks it could.”
Since then he has also been exposed to more sides of the cryptocurrency market, such as the endless flood of ICO offers. “I wish I had a bitcoin for every phony white paper I’ve been shown the last six months, by people trying to raise money before the SEC clamps down,” Ferguson reportedly said last week. “When there’s no regulation, then the rogues are very quickly on the scene.”
Ferguson isn’t the only noted academic figure that looked at how bitcoin fits economic history recently. Last Monday, Professor Robert Shiller, who received the 2013 Nobel prize in economics and is famous for the Case-Shiller Index, published an article talking about the way the allure of bitcoin fits enthusiasm around previous attempts to reinvent money.
What role in the economy do you see Bitcoin fulfills in ten years from now? Share your thoughts in the comments section below.
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