The Federal Reserve Bank of St.Louis has weighed in regarding its viewpoint on bitcoin and other cryptocurrencies. In a new post, the bank stated that bitcoin has similar attributes to fiat money. The report stems from a research paper published earlier this year.
Crypto and Fiat Money Have No ‘Intrinsic Value’
The St. Louis Fed along with 11 other regional reserve banks form the United States’ Central Bank. And, according to the St. Louis branch’s latest research paper, bitcoin has no “intrinsic value” — akin to the U.S. dollar or the European Union’s euro.
In the document, they argue:
“Bitcoin is not the only currency that has no intrinsic value. State monopoly currencies, such as the U.S. dollar, the euro, and the Swiss franc, have no intrinsic value either.”
With that said, the Federal Reserve Bank of St. Louis does not directly advocate virtual currencies. In February, the bank pointed out bitcoin as an “inefficient and poorly designed means of payment.” In that report, cryptocurrencies’ association with criminal activities, such as money laundering and tax evasion, were also highlighted.
Since the United States dropped the “Gold Standard” in 1970, the value of USD is not pegged to gold, but rather to faith in the United States government. On the flip side, with cryptocurrency you only have to trust the code. The former dynamic is starting to seem increasingly antiquated in the ongoing blockchain revolution.
Like Cash? Better Than!
Bitcoin was designed to send money peer-to-peer without the need of a trusted third party. However, it is possible to deal in cash without a middleman — like banks — but sending money overseas a la remittances is impossible without the involvement of the third party, who always take their cut.
With bitcoin, then, value itself can be transferred anywhere around the world pseudo-anonymously without the need of middlemen.
As the St. Louis Fed just wrote:
“In that way, bitcoin was designed to be a lot like cash.”
Like cash, yes, but better — censorship-resistant and able to be transacted with 24/7.
Cryptocurrencies being compared to fiat currency, especially by the St. Louis Fed, is certainly a positive sign for the maturing crypto space. But there’s no question there’s still a lot of catching up to do when it comes to winning over hearts and minds in the public arena.
What is your take on the comparison of cash and cryptocurrency? Share your views in the comments section.
Images via St. Louis Historical Preservation, Federal Reserve