On Tuesday, the head of Japan’s Central Bank, Haruhiko Kuroda, stated that in order for Bitcoin to have a future as a currency, the virtual currency must prove that it can be a stable and reliable medium of exchange in the aftermath of recent scandals and constant price fluctuations.
In the wake of such widely-reported scandals as the implosion of the Tokyo-based exchange, Mt Gox, which resulted in a loss of almost 600,000 million US dollars’ worth of bitcoins with the company’s operators now facing legal action all over the world, Kuroda’s doubts are certainly justifiable.
Bitcoin is not backed by any government or a central bank, which has resulted in negative responses from government officials which have ranged from skepticism to calls for an outright ban.
Kuroda went on to say: “It is not a currency, and I don’t think it is a general means of settlement. Without safety or stability in its value, there would be no demand. In that sense, it cannot be a currency.”
Mt Gox was one of the most trusted exchanges for Bitcoin transactions prior to its collapse. This has led to doubts as to the reliability of other major exchanges and even whether the digital currency will survive.
Agree to disagree
Kuroda’s comments, however, are at odds with recent developments, especially in countries like Australia and the US.
On April 8, a Bitcoin ATM presentation was held on Capitol Hill in Washington DC where Congressman Jared Polis (D-CO) became the first known representative to buy Bitcoin. Then, US congressman Steve Stockman (R-TX) filed a bill proposing that Bitcoin should be “treated as currency for federal tax purposes”.
Furthermore, St. Louis Federal Economist, David Andolfatto, stated: “Bitcoin could be a good threat to central banks,” in an interview with Business Insider.
The state of Texas announced yesterday that while it will not regulate digital currencies as money, Texans will be able to use them to buy and sell goods and services free of regulation.
Meanwhile, Bitcoin ATMs have been springing up around the world along with new methods to facilitate Bitcoin transactions and with an increasing number of businesses opting to gain a competitive edge by starting to accept Bitcoin from Australia to France among many other countries.
Japan’s ‘zombie’ economy
With this in mind, it becomes fairly easy to dismiss Kuroda’s opinion on Bitcoin and its lack of demand. Moreover, it can be said that despite Bitcoin’s high-profile scandals, demand for this innovative and decentralized medium of exchange has been increasing exponentially.
Bitcoin is therefore perfectly positioned to fill a vacuum – one that has been created by centralized banking as a result of bureaucracy, red tape, and the central bank’s discount window which excludes small businesses and the general public while giving an unfair advantage to the top 1%.
So while it can be said that the US government has been warming towards the virtual currency, Japan’s Central Bank is seemingly burying its head even deeper in the sand.
Despite the fallout from the collapse of Mt Gox, the technology behind Bitcoin has not been compromised. Yet Japan appears to be sticking to its guns, which is unfortunate since their Central Bank could cause them to miss some of the benefits of a virtual currency.
This is indeed a shame, especially when we realize that the Japanese banking sector and the economy as a whole has been dubbed by such renowned publications as The Economist as a “zombie economy” – one that is being kept afloat only due to their own policy of QE# i.e. money printing and artificial inflationary measures.
But we would love to hear what you think about Bitcoin’s outlook. Do you think it has a future?
Reactions from the Bitcoin community
Filip Roose (Co-Director at Belgian Bitcoin Association): “Governments don't tend to always be right about something and most of the time they are simply slow and not able to catch up with technological breakthroughs. So I'm not really seeing them as a visionary.
From the perspective of a company however, it is the greatest invention since the internet: low to zero costs, no high step-in costs, less risks and most of all; your money immediately paid.
Of course Bitcoin (and cryptocurrencies in general) still have a long way to go when it comes to being accepted and officially usable anywhere. From a customer perspective, it is interesting, but not enough implemented yet to start using it everywhere.”