Warren E. Weber, a research consultant at Bank of Canada published a 37-page long research paper, considering how a financial system where bitcoin would be the standard currency, would differ from the current system, which is based on fiat currencies.
Weber is also a visiting scholar at the Federal Reserve Bank of Atlanta and adjunct professor at the University of South Carolina. He explored the similarities between the Bitcoin standard and the now defunct gold standard.
Issuing these fiduciary currencies will be one of the powers central banks will have left under such a system. Importantly, the ability of central banks to impose interest rate policies that affect domestic economies, would be removed, due to the nature of Bitcoin’s arbitrage.
While the longevity of such a Bitcoin standard is unclear, it is likely that another, perhaps superior cryptocurrency standard may take its place. There is of course, always the risk that a financial crisis, may cause a loss of confidence in such a cryptocurrency based financial system, which may trigger a return to an old financial system, whether fiat or gold standard.
For more information, please consult the BitcoinMagazine article.
