The IMF describes cryptocurrencies as a secure digital form of payment without intermediaries. The organization believes that these new currencies can solve problems of traditional banking.
According to the International Monetary Fund (IMF), cryptocurrencies will be the next “evolution of money”. They believe that currencies like Bitcoin will transform the way people interact with the banking system today.
The agency said in an informational video, which it recently posted on Twitter, that cryptocurrencies as a new type of “secure crypto-based” currencies provide the ability to send money internationally without the need for intermediaries.
The posting of the video has caused a stir in the cryptocurrency ecosystem since the IMF describes the ability of cryptocurrencies such as Bitcoin or a variation of this technology to “completely change the way we sell, buy, save, invest and pay bills.” This statement suggests that the agency is betting on the cryptocurrency sector to play an important role in the international economy, solving current banking problems.
The video briefly mentions subjects such as immutability, trust in the financial system, and privacy. Likewise, the IMF criticizes that companies belonging to traditional banks charge high transaction fees and that users must place all their trust in these institutions to ensure that their savings are protected. The use of cryptocurrencies can help overcome those weaknesses, according to the agency.
The IMF notes that features like an immutable ledger, crypto security, and the removal of intermediaries are prominent features of cryptocurrencies that enhance the current monetary system. Likewise, they consider that these assets can benefit banks with less expensive and faster transactions, especially international ones.
Cryptocurrency Risks
The International Monetary Fund also states the risks of these new financial tools. For example, if the user loses “his password”, he will never have access to his money again. As the owner and responsible for their currencies, each user must ensure that they safeguard access to them.
The posting describes most cryptocurrencies as “anonymous” when only a few — such as Monero and Zcash — provide privacy to their users. Bitcoin does not belong to this group, but some mechanisms and wallets help increase the privacy of transactions.
Several companies in the sector and some law enforcement agencies worldwide have tracked transactions on public blockchains such as Bitcoin or Ethereum. It is much more difficult to track a cash transaction than a Bitcoin transaction. For that reason, physical fiat money remains the preferred payment method among criminals.
Furthermore, the International Monetary Fund noted that the cryptocurrency market can be very volatile. They mentioned that these networks do not usually process large amounts of transactions and that not all businesses accept assets such as Bitcoin. The cryptocurrency ecosystem has discussed these problems since they are challenges to solve to achieve the incorporation of this technology.
The fact that the IMF has decided to talk about this technology suggests that cryptocurrencies are reaching further and further. Furthermore, traditional banking is beginning to accept them as an ally, rather than an enemy.
By Alexander Salazar
