The gold standard seems to be a thing of the past… It is the bitcoin standard now. The Chief Economist and Executive Director of Monetary Analysis and Statistics at the Bank of England, Andy Haldane recently mentioned that bitcoin is a harder money than the well-known gold standard. Andy Haldane was speaking at Bank of England/ Centre for Central Banking Studies Chief Economists’ Workshop while he made that statement.
Andy Haldane gave a presentation titled “Old Money, New Money” on digital currencies during the event where he and his team made a mention of bitcoin and reasoned that sustained adoption of bitcoin will cause deflation. In the same presentation, he went back to the basics where he discussed about the advantages and disadvantages of bitcoin.
According to Andy Haldane’s team, bitcoin can be easily described with respect to four important aspects.
- Distributed — the digital currency exhibits greater resilience without any central controlling authority over it. However, it also leads to coordination issues.
- Pseudonymous — Anonymity with respect to bitcoin transactions is not fool-proof. There is a possibility of achieving a certain degree of anonymity by following certain best practices, but still given the transparency associated with blockchain, bitcoin transactions can be called pseudonymous at best.
- Push only — Payments once made can’t be reversed and it has to be initiated by the sender.
- Individually cheap, but socially expensive. Bitcoin is just a digital token, but the value associated with it is huge.
In the presentation, Andy Haldane also mentions about its potential to disrupt traditional banking and financial industry. His forecast states that close to 80 percent of the world population will have smartphones in the next five years and this will increase bitcoin adoption. People will also start considering bitcoin as their savings option and store them. He was however not impressed by the digital distributed ledger system and expressed his displeasure about it being digital.