Banks’ control over money is “outmoded,” and cryptocurrencies such as bitcoin () will empower those who lack access to traditional financial services, a former director of the United States Mint told the Voice of Blockchain conference in Chicago.
Speaking Saturday about the future of currency, Edmund Moy, who served as the Mint’s 38th director between 2006 and 2011, praised cryptocurrencies as a free market solution that could bring “unbanked” people around the world out of poverty. He also said cryptocurrencies would disrupt the way governments have traditionally provided fiat currencies in the same the way email affected postal services.
“Currency was always an agreement between the buyer and the seller,” Moy said. “When more people began using precious metal as transactions, they didn’t have the scale to smelt it, guarantee its purity and also guarantee the content and weight. That’s when governments got involved.”
The next couple of years will be critical for the cryptocurrency industry, according to the former Mint director.
Moy said he first became aware of bitcoin in 2010 when he formed a strategic team to keep him abreast of developments in digital and virtual currencies.
Making Blockchain ‘Invisible’
“The whole concern was that a bunch of Americans who had money in Mt. Gox lost it. What was the government going to do?” he recalled. “The conclusion by uneducated policymakers was, ‘Gosh, we need to shut down bitcoin.’ That’s the equivalent of, if J.P. Morgan Chase got robbed that we would ban the U.S. dollar.”
Those working in bitcoin and the larger cryptocurrency sector need to help governments understand the impact of their work without talking over their heads, he suggested. This point was echoed by Matthew Roszak, co-founder of Chicago-based enterprise blockchain technology provider Bloq.
“We need to make it invisible,” he said. “There’s all this talk about crypto and applying blockchain, but these are things that should be rails running underneath what’s going on. When we send an e-mail, we’re not going to say we’re going to ‘send an SMTP.’ We’re kind of in that lingo, which is not how it should be used.”
The Political Value of Currencies
Beyond shaking what he called its “bad boy image,” Moy said the cryptocurrency sector must also overcome concerns around the accessibility, fungibility and stability of bitcoin and altcoins that are similar. While some central banks, like the Bank of England, may be exploring the tokenization of fiat currencies and other uses of blockchain technology, he cautioned it will be difficult for governments to shift away from traditional approaches to monetary policy.
“Governments have gotten too used to growing and shrinking the money supply to take care of a political agenda, whether it’s to introduce welfare payments or to start wars,” Moy said, pointing out that bitcoin has a limit of 21 million coins. “It’s a lot easier to fund those things if you can print as much currency as you want.”
Moy, who is now a chief strategist for Fortress Gold, received applause for his support of cryptocurrencies, but he warned that changing attitudes among those currently in public office is going to take a lot more work.
“The next couple of years will be critical,” he said. “There will be greater and greater government involvement, from educating (the public) to trying to figure out how to protect people from the worst excesses. It’s incumbent on this nascent industry to be really engaged with the government over the short term, because that’s going to determine the operating environment you’re going to have in the future.”