Editorial – Beware of crypto-currency, lest you risk another September 1929 crash

Mac Olsen

Tangible forms of currency, and to an extent electronic currency, are the most appropriate for conducting everyday transactions.

But what doesn’t fit within that realm, and which should be heavily regulated or banned entirely, is crypto-currency.

This form of “financial medium” as it is called is an entity unto itself, with no government regulation or oversight. It doesn’t answer to anyone except those who engage in its speculative nature and conduct transactions that could be immoral or criminal in nature.

Crypto-currency, as defined on Wikipedia.org, “is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets.

“Crypto-currencies are a type of digital currencies, alternative currencies and virtual currencies. Crypto-currencies use decentralized control as opposed to centralized electronic money and central banking systems.

The decentralized control of each crypto-currency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.”

The very nature of crypto-currency is its decentralization, which should make everyone wary of embracing its use.

An entity unto itself answers to no one, subject to neither government oversight nor regulation, and it could become so unwieldy as to risk a financial collapse as we saw with Wall Street in September 1929.

Moreover, given how sophisticated hackers are becoming in their techniques, it might not take much to bring down a crypto-currency, no matter how sophisticated the firewalls and encryption systems are.

Crypto-currencies, if the criminal underworld, terrorist groups and other forms of unsavoury activity do not already favour them, will be the financial medium by which they conduct their business.

Consequently, they will avoid detection and accountability to the governments and societies to which they do harm.

Granted, some people don’t like the central banking systems because of the controls, regulations and “strings attached,” to banking and conventional financing.

But central banking systems are far more stable and appropriate when it comes to everyday transactions.

Hard currency and electronic transactions with debit cards and smartphone apps are far more tangible and stable than crypto-currencies.

It is very unlikely, in the event of a power outage, that crypto-currency will be useful to purchase essential items. Hard currency, on the other hand, will still have purchasing power.

Central banking systems are not without flaws and vulnerable to hackers and ill-advised government fiscal policies.

Currency speculators can also do harm when it comes to international trade. But they, too, are also subject to government oversight and regulation.

At least for now, it would be very unwise to engage in crypto-currency transactions, primarily because they answer to no one and can become unstable.


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