The rise of bitcoin as an asset may result in monetary authorities starting to hold it. In fact, some central banks are already holding Bitcoin.
Peter Smith, the Co-Founder and Chief Executive Officer of Blockchain, believes that in 2018 central banks will start holding major cryptocurrencies, like Bitcoin and Ether.
As the crypto fad is spreading around the globe, the CEO of Blockchain, the second most popular cryptocurrency wallet after Coinbase, Peter Smith has made an important prediction. As per Smith, in 2018 central banks will begin to hold major cryptocurrencies like bitcoin and Ethereum’s native token Ether.
“I think this year will be the first year we start to see central banks start to hold digital currencies as part of their balance sheet. Bitcoin is already a top 30 currency by supply, and this trend and pressure to hold digital currency as part of reserves will only accelerate as the price rises.”
The rise of bitcoin as an asset may result in monetary authorities starting to hold it. In fact, some central banks are already holding Bitcoin. Reportedly, the Bulgarian government in its account holds more than $3 billion in bitcoin, most of which are funds seized during law enforcement investigations and crackdown on dark web marketplace operators. The Bulgarian authorities in May officially declared that it had confiscated 213,519 bitcoins. At the price of $15,000, now those bitcoins are worth over $3.2 billion.
The Bulgarian government said,
“As a result of this criminal activity the damages recorded by the Customs Agency, only for the year 2015, is around 10 million Leva. As well, up to now were found in the virtual space bitcoin wallets of the main suspects with a total value of 213,519 bitcoins.”
Market analysts consider Bitcoin reaching a market capitalization of USD $1.5 trillion which is roughly the amount of US Dollars in circulation, and then further evolving into a premier store of value, ultimately competing against the $8 trillion gold market. No one obviously can predict the time it would take Bitcoin to get to these levels.
Apart from seizing bitcoin on account of law enforcement, central banks worldwide will also be holding cryptocurrencies considering the significant growth rate of these virtual currencies. As the leading financial authorities, central banks will require having a supply of bitcoin and alternative cryptocurrencies, in case bitcoin becomes one of the reserve currencies of the global economy by targeting the $40 trillion offshore banking market, $8 trillion gold market, and the $50 trillion fiat currency market.
The top central banks and government agencies in China, Europe, and the UK have been considering issuing central bank-issued cryptocurrencies for some time now. However, even after spending millions of dollars in research and development, central banks are still far from issuing any government issued cryptocurrencies.
The concept of decentralization is the heart of cryptocurrencies and blockchain-related networks, so that users can send and receive payments, and have peer-to-peer information passing through the Blockchain network.
Whether central banks trust in Bitcoin supported technology or not, the security of value and investment of Bitcoin could make them hold a huge amount of digital currencies. Particularly, this would only happen if cryptocurrencies evolve into global reserve currencies.
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