For the International Monetary Fund (IMF), cryptocurrencies have all the potential to become the next evolution of money.
Through his Twitter account, the International Monetary Fund (IMF) published an informative video where he defines what the cryptocurrencies, , stating that it is a new form of digital assets that have great benefits and risks and have all the potential to become the next evolution of money.
According to the IMF, cryptocurrencies bring multiple benefits to current financial systems. For example, the implementation of these digital assets allows transactions to be carried out much more quickly, safely and without intermediaries, making it possible that through cryptocurrencies international transfers do not require days to be made, but are carried out in a matter of hours. On the other hand, the reduction of commission costs when transferring value is also one of the great advantages associated with cryptocurrencies that the IMF highlighted.
For its part, in addition to highlighting the advantages and benefits that come with the use of cryptocurrencies in the traditional financial system, the IMF also noted that the technology behind these assets, the technology blockchain, has great potential that can be applied to the development, growth and transformation of other sectors and industries other than the economic sector. However, the IMF also warned about the possible risks associated with the use of cryptocurrencies and blockchain technology, highlighting the anonymity and volatility of these assets.
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Cryptocurrencies as the evolution of money
The IMF explains that the form of money we know today for the storage and exchange of value and for the acquisition of products and services, was developed as an efficient way of exchanging goods within society, but that it was the result of a process of constant evolution and development.
Before fiat money In the form of money that we know today, societies engaged in bartering or direct exchanges of one good or service for another, something that over time became less effective and efficient. Then, as societies evolved and became more and more complex, the need to develop new, efficient forms of money to exchange value or acquire products also arose; for example, raw materials and precious metals such as gold and silver were widely used as a form of money until the arrival of fiat money.
Radical changes in the forms of money
The introduction of fiat money into society was a radical change at the time, as the exchange of goods or precious metals, which do have an intrinsic value, was replaced by paper money. This change meant the substitution of a good for a promise of value dictated by a bank or a government and represented on paper, a fact that at the time was not widely accepted by society. Even so, today it is the form of money that we know, accept and use daily, although with the breaking of the gold standard, it is a money that is no longer backed or secured by any valuable good or raw material.
So, based on the evolution and development of the different forms of money that have existed in societies, the IMF argues that cryptocurrencies can become that new form of money, capable of replacing the need for fiat money.
The constant changes facing today's society and the serious inflation problems presented by several fiat currencies are once again leading society to consider the definition of a new, effective and efficient form of money, which has the potential to meet the growing needs of a society as changing as ours. So far, cryptocurrencies and digital assets have not become a widely used good in society, but governments and central banks worldwide are considering the possibility of introducing these digital assets as a way to maintain the stability of their currencies and improve the services provided to society.
Risks associated with the use of cryptocurrencies and digital assets
For the IMF, one of the biggest risks associated with the use of cryptocurrencies is the anonymity. According to the entity, this feature makes cryptocurrencies vulnerable to use in illicit activities, such as financing terrorism or money laundering. Most open-source cryptocurrencies, such as Bitcoin o Ethereum, allow users to carry out money transactions directly without the supervision or intervention of any third party, so in this type of transfers the identity of the person who is sending money or the person who receives it is not verified.
Likewise, another of the important vulnerabilities or risks that the IMF points out is the volatilityAs we all know, the price of cryptocurrencies rarely remains stable, and this is something that can put the capital or savings of any user or entity at risk. Still, the IMF believes that if these risks are resolved or countered, cryptocurrencies and digital assets can become the next step in the evolution of money forms.
“If we can counteract the risks, then this new technology or some variation of it can completely change the way we sell, buy, save, invest and pay our bills. And who knows, this could be the next step in the evolution of money.”
In this sense, the IMF believes that cryptocurrencies can radically change the way we interact with money, improving the capabilities of the traditional financial system.
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