Fiat 2.0 Currency – What Would that Mean?

By May 5, 2015Bitcoin Business
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Fiat 2.0 Currency – What Would that Mean?

The world economy is still using an old-fashioned style and it urgently needs to introduce new technologies that can help modernize the current financial system. Today, there are still 2 billion unbanked adults that should have access to modern financial services. To make matters worse, the monetary friction is extremely high, setting transaction costs at a predatory level.

What if governments started to introduce Fiat 2.0? That would most certainly be a Bitcoin derivate although it would be based on a new kind of technology.

Could a Fiat 2.0 coin technology, if properly designed, eliminate this friction by allowing anyone to be their own Bank. The answer is that it could possibly decrease transaction costs. However, for this to happen we should consider a number of issues that would be standing in the way.

One of the major issues should be the regulatory incompatibility. While Bitcoin offers users a way of maintaining privacy and other such mechanisms ensuring anonymity, a government Fiat 2.0 currency would be contrary to that since it would require an individual’s ID verification in order to transmit funds. This alone would introduce cost and friction, as some entity, probably a company, should ensure this kind of service.

Another major issue would be related to monetary policy and the nature of the technology.  A Fiat 2.0 currency would be directly connected to the government centralized monetary policy and those controlling it; in this sense a Fiat 2.0 currency wouldn’t be immune to devaluation and inflationary policies

Bitcoin and a Fiat currency Token would be fundamentally two different technologies with very different properties and value to end users.  Bitcoin is a decentralized digital currency that exists without a central authority while a Fiat 2.0 currency derivative idea that represents a standardization of the technology behind transmitting a national currency.

A Fiat 2.0 currency would carry the pros and cons of the underlying currency and would be more of a transmission standard than a new form of cash.

What if governments started to introduce Fiat 2.0 ? That would most certainly be a Bitcoin derivate […]

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