- The crisis created by coronavirus pandemic will trigger changes in the existing financial system.
- The centralized digital currencies are the first step towards embracing the true value of decentralized money.
According to Daniel Polotsky, the CEO of Bitcoin ATM operator CoinFlip, Covid-19 exposed the deficiencies of the American financial system and the need of a more efficient, nimble, and equitable solutions.
COVID-19 is a catalyst
In a written comment to FXStreet, Mr. Polotsky emphasized that over 25 million American households are excluded from the banking system, which means they are deprived of the ability to save and transfer money. Moreover, lack of access to the banking services delays their desperately needed stimulus payments. The expert believes that the coronavirus crisis will speed up the creation of a digital dollar as the idea is already discussed in Congress.
In March, while debating what became the CARES Act, Congressional leaders considered creating a federally regulated digital currency and sending payments to digital wallets held at the Federal Reserve. It is easy to see why the idea was appealing: Digital payments are fast and safe. Setting up no-fee digital wallets for consumers could help get stimulus funds into the hands of all Americans more efficiently than the current banking system can, he said.
The digital dollar was stripped from the final version of the CARES Act, but the idea is not dead. Congresswomen Rashida Tlaib (D-MI) and Pramila Jayapal (D-WA), included mention of a “digital public currency wallet system,” which could be developed by 2021, in another stimulus bill they introduced recently.
Centralized digital money is the beginning
While at this stage the governments consider the issuance of the centralized versions of digital currencies, so-called CBDC (central bank-issued digital currency), it is only the first step that will eventually pave way for the adoption of decentralized digital money, such as Bitcoin.
The true value of digital dollars resides in building a decentralized blockchain infrastructure. Blockchain technology allows for innovations that can transform our economy in ways that were simply not possible before.
Digital currencies will reduce the costs and facilitate cross-border money transfers by cutting out banks from the process.