Private currencies sponsored by corporations will replace state-backed money and even distributed cryptocurrencies like bitcoin, said UK politician Douglas Carswell at a talk hosted by prominent think-tank the Institute of Economic Affairs yesterday.
Carswell, who is Member of Parliament for the seaside resort town of Clacton in the east of England, compared bitcoin to the ZX Spectrum – a personal computer released in 1982 that was among the first machines to be adopted by mainstream users.
Despite its early introduction to the marketplace, the Spectrum was eventually eclipsed by other personal computers over the years.
“Bitcoin might be to currency what the ZX Spectrum was to computing. You knew it was something exciting when you saw it, but it took 20-30 years before [widespread adoption].”
It will be corporations or other providers of utility who are most likely to introduce a currency that would be used by the vast majority of people, he indicated. This would be driven in part by digital currencies like bitcoin, but also because of high inflation rates and a “doomed” post-Bretton Woods system.
“The intriguing question that will determine the shape of the world is ensuring that every country has access to a multiplicity of reserves […] whether it’s bitcoin, O2 credit, Tesco credit. I suspect [the dominant currency of the future] will be backed by a large company that provides something of utility. A mobile phone company, or a supermarket chain,” he said.
Carswell, a member of the Conservative party, is a noted for his outspoken commentary in the UK press, through a column in The Telegraph and appearances in national broadcast media.
About the meeting
The talk at the institute also featured a number of prominent academics, including Dr Forrest Capie, Professor Emeritus of Economic History at Cass Business School, City University, London; Kevin Dowd, Professor of Finance and Economics at Durham University Business School, who recently published an IEA paper on bitcoin; and Timothy Evans, a Senior Fellow at the Cobden Centre, also in London.
The BBC’s technology correspondent, Rory Cellan-Jones, moderated.
Several panellists expressed optimism that non-state currencies would be the way of the future, although there was a divergence in views on whether bitcoin would be a dominant currency and whether it could be considered a form of money.
As Capie noted:
“Bitcoin might be a good investment [due to its limited supply] but it’s not money. If demand grows, which seems likely, and the supply is constrained [then the price will rise].”
The IEA event was oversubscribed, with more than 60 people attending, the institute said. The think-tank organised the event in conjunction with the publication of Dowd’s paper on bitcoin.
The IEA is known for being a prominent supporter of free markets and is closely associated with the work of economist Friedrich Hayek. Over the years, 12 winners of the Nobel Prize for economics have authored research work published by the organisation.
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