A recently released Goldman Sachs report puts the spotlight on how bitcoin and cryptocurrencies could be used as alternative forms of money in struggling economies.
Goldman strategists Zach Pandl and Charles Himmelberg penned the said report.
A report from Bloomberg said that it highlights that the U.S. dollar’s usage by other nations means there is a demand for a store of value and medium of exchange that can be used across national borders.
To that end, the dollar has done well – but it may not be the best currency in all cases.
As the two strategists explained:
“In those countries and corners of the financial system where the traditional services of money are inadequately supplied, bitcoin (and cryptocurrencies more generally) may offer viable alternatives.”
However, cryptocurrencies, as they are now, would not essentially be ideal for the purpose, according to the report.
It wouldn’t be suited for an environment roiled by speculation and volatile prices.
“Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits,” Pandla and Himmelberg wrote.
National cryptocurrencies should be considered as assets identical to gold or other metals to be viable, they continued.
And while no country has actually initiated its own cryptocurrency yet, some governments are making moves to do so
Notably, Venezuela’s President Nicolas Maduro announced last month that the country would generate its own token to help its economy.
Yet officials in the country, including the opposition-led national legislature, have strongly opposed the idea.
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