Alternative Cryptocurrencies Set to Challenge Central Banks in 2019
In the rapidly evolving world of cryptocurrency, a new trend is emerging that could have major implications for the global financial system. In the past, the issuance of money was the exclusive domain of central banks, but in recent years, a multitude of alternative cryptocurrencies have been introduced by various entities.
In 2019, this trend is expected to accelerate as prominent investors like Andreessen Horowitz, Bain Capital, and Peter Thiel have collectively invested over $300 million in stablecoins. These projects aim to create blockchain-based currencies such as dollars and euros to compete directly with traditional central bank-issued currencies.
The Rise of Stablecoins
The concept of stablecoins challenges the conventional notion of money creation by capitalizing on the realization that the majority of dollars in circulation exist solely as digital records, rather than physical banknotes. By leveraging blockchain technology, stablecoin projects like Maker and Basis seek to issue cryptocurrencies that maintain a one-to-one value parity with fiat currencies like the US dollar.
Maker backs its digital currency, known as DAI, with a cryptocurrency called Ether, while Basis employs a unique algorithm to manage the supply and demand of its digital currency to ensure a stable value. These alternatives to central bank-issued money are governed by decentralized algorithms, eliminating the potential for a central issuer to intervene in the competition.
Global Expansion of Cryptocurrencies
Beyond stablecoins, several countries, including Venezuela, Iran, and the Marshall Islands, are planning to introduce their own government-backed cryptocurrencies in 2019. These initiatives are designed to operate independently of central bankers, signaling a major shift in the traditional monetary landscape.
Expanding Beyond Currency
Cryptocurrency projects are also expanding into other facets of governance and public services. Bitnation, a platform referred to as “Governance 2.0,” offers a marketplace for digital citizenship, while project FOMO3D has established an autonomous pyramid scheme that pays out dividends in a manner designed to continue indefinitely.
Kleros is another project seeking to disrupt traditional government services by providing a decentralized network of arbitrators for dispute resolution. Instead of relying on traditional legal systems, parties can enlist the services of Kleros to reach a fair verdict enforced by the blockchain.
Conclusion
The emergence of alternative cryptocurrencies and blockchain-based systems represents a remarkable shift in the global financial and governance landscape. As these projects continue to evolve and gain traction, their potential impact on traditional central bank currencies and government services remains a topic of great interest and debate. The year 2019 promises to be a pivotal period for the development and implementation of these innovative alternative systems.
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