Within five years, the first central bank issues a blockchain-based currency
In an interview, the researcher Dr. Ingo Fiedler from the University of Hamburg on cryptocurrencies, their significance for society and their future potential.
You think bitcoins are unique? Far from it – there are now hundreds of cryptocurrencies worldwide. Time to deal with them. We have Dr. Ingo Fiedler, who is researching cryptocurrencies at the University of Hamburg, asked: Do we have to take Bitcoins & Co seriously?
Cryptocurrencies and their future potential
Dr. Fiedler, Ethereum, Ripple, Omisego, Qtum, Stellar Lumens – it makes your head buzzing. Today, there are several hundred cryptocurrencies that few people know. Did we miss something?
Dr. Fiedler: The topic has several aspects. If you ask me about the overall social significance of cryptocurrencies, I reply: they are not that important. This changes abruptly when a central bank suddenly issues a cryptocurrency.
Do you see this development coming in the near future?
Dr. Fiedler: Yes, definitely. I think that’s very realistic within the next five years. Some countries, like Great Britain, are already experimenting with it. Then the cryptocurrency would be another form of distribution of the valid currency, such as the British pound. It would have the same value as the pound and would coexist with cash and bankroll. That would be a Blockchain based pound.
What advantage would such a virtual currency have?
Dr. Fiedler: Such a blockchain-based cryptocurrency has excellent features and is in some ways better than a centrally handled digital currency. A transfer with cryptocurrency would be much faster than a traditional SEPA transfer. Also, the fight against money laundering would be much easier through full transparency – for example, it would be conceivable that providers of online gambling in the sense of a white / blacklisting only accept this – legal – crypto currency. The creation of money in the real economy could also be delayed: every citizen could get their own account at the central bank. This would simplify a country’s monetary control and make it more efficient, direct and transparent.
Why are there so many cryptocurrencies?
Dr. Fiedler: They are put on the market for different purposes. Bitcoins, for example, are less of a currency, but rather have a value retention function – much like gold. They are rarely used to pay for goods because the transaction costs are too high, as they are for gold. Also, the fluctuations in value are high, which has to do with the young maturity of bitcoins and the low number of shareholders compared to about gold. Other cryptocurrencies act more as a “utility token” for certain services, such as “smart contracts” – or self-terminating contracts – or for calling in African countries.
Can you earn money with cryptocurrencies?
Dr. Fiedler: Yes, especially if you give it out. The market is currently characterized by a high willingness to pay very early investors who have become very wealthy. With them, the money sits loose and therefore is the release of new crypto currencies or blockchain-based tokens currently earn a lot of money.
With cryptocurrencies is currently a lot of money to earn.
Dr. Ingo Fiedler, Faculty of Economics and Social Sciences, University of Hamburg
Which is the most important cryptocurrency in your opinion?
Dr. Fiedler: In the future, all cryptocurrencies issued by central banks will become more important. But they are not there right now. Of the current cryptocurrencies, I believe only three will develop. On the one hand , these are bitcoins , which are technically clearly inferior, but have the largest network effect and the second ethereum , which will play a role in corporate financing, for example, and offer smart contracting options.
And the third crypto blockbuster?
Dr. Fiedler: This is a currency based on a “Directed Acyclic Graph” (DAG) – a kind of multidimensional blockchain – and highly scalable. Here is the first DAG-based currency to call IOTA , which in contrast to the “normal” blockchain works the better, the more transactions are made.
What else characterizes IOTA?
Dr. Fiedler: IOTA has no transaction costs and is therefore very interesting for micro- and nanopayments. Transactions can also be carried out offline, which makes them exciting for the logistics market. This brand new cryptocurrency is not finished yet and an experiment that may well fail. But I see a lot of potential in this technology.
Thank you for the interview, Mr. Fiedler.
Info Dr. Ingo Fiedler
Ingo Fiedler (34) is a visiting professor at Concordia University in Montreal / Canada and Post Doc Researcher at the University of Hamburg. He studied business administration and economics at the University of Hamburg and earned his doctorate with the highest honors. He graduated as a visiting scholar at the University of California, Berkeley, USA, and Concordia University, Montreal. Fiedler is the author of six specialist books and around 40 scientific articles. His expertise is regularly requested by political decision-makers in Germany and abroad, such as ministries at federal and state level, the Bundestag or the European Parliament. His research interests include gambling, blockchain, cryptocurrency and money laundering.
Info cryptocurrencies
Cryptocurrencies are digital means of payment that can be purchased on the Internet. Currently (2017) there are over 3,000 different cryptocurrencies. They are created by private individuals and are not subject to a sovereign organization. They are based on blockchain technology. The best-known cryptocurrency are Bitcoins, which are traded since 2009. Cryptocurrencies are subject to strong price fluctuations. With Kryptogeld you can pay directly digitally and do not need a bank. It is not legal tender. The German Federal Financial Supervisory Authority (BaFin) classifies the cryptocurrency Bitcoin as a currency unit comparable to foreign currency.
