One of the biggest attractions and point of conversations about the blockchain has been the possibility of it becoming a single global currency. Some have been intrigued by the notion while others have dismissed it as fanciful science fiction. Scott Galit, the CEO of the New York based Payoneer is in the latter category, but he has his reasons.
For the uninitiated, Payoneer is a financial services company. It is spread across more than 200 countries and provides a cross-border platform for digital payments to businesses and individuals.
In a recent interview conducted by CNBC on the 28th of December, the head of the payments processing firm shared his views. According to him to get to the point of being a single global currency any non-fiat medium would face huge obstacles, thus expecting Bitcoin (BTC) to do so is a bit unrealistic.
Two Issues With BTC
Taking a more logical route than most naysayers, Galit presented his thoughts about frictionless commerce and fiat currencies losing their pre-eminence. He does not feel it is reasonable to expect national governments to accede to a digital currency nor does he see central banks, particularly the United States Federal reserve, yielding power.
The government of most nations is dependent on taxation for planning their budget. This would be in the doldrums if they were using currency as unstable as BTC (or any crypto for that matter). If the fiat currency was as volatile, it would make day to day operations of the government near impossible; in fact, that is what happened in the 1920s Germany and is the case today in Venezuela.
In saying that, US state governments are certainly exploring the option. As per CNBC, in an interesting development, Ohio State is now the first US territory that allows its residents to pay taxes with Bitcoin. The caveat to this is that it is only some taxes and the coin is still converted to USD before it actually reaches the state coffers.
Central banks, Galit other point is a different matter. The Bankers help to actively manage the economy and provide leadership. Here, he says, it also becomes about power,
“Part of that is actually managing currency in the interest rates [for lending] and in exchange rates. If you don’t actually have any control over a currency you’ve lost one of the major policy tools that you have, so what do you do?”
From the other side of the fence, many major innovators have disagreed with this notion. Earlier in the year, Twitter CEO, Jack Dorsey had opined that
“the internet deserves a native currency.”
This view has been backed by companies such as Square and even Apple’s co-founder Steve Wozniak.
While the points raised by Mr. Galit certainly do raise interesting dilemmas and would be a major challenge for transitioning towards using a particular currency for the whole world, it is certainly not impossible. Just like most of Europe united under a single block, so too can the whole planet. It will no doubt be fraught with myriad issues but it is certainly closer to reality than fiction.
fbq(‘init’, ‘221121771715296’); // Insert your pixel ID here.