June 18, 2024

G7 Commission examines bitcoin and stablecoins

G7 Commission examines bitcoin and stablecoins

A G7 working group focused on exploring the potential impact of stablecoins on the global economy,released a new report. It states, among other things, that Bitcoin has failed to become a reliable store of value or a medium of exchange for its users.

In this regard, the document focusesfocuses on the increasingly widely used stablecoins, which are virtual tokens designed to track the value of various traditional assets such as the US dollar or gold.

In a summary of the G7 report, the stylecoins are placed above other cryptocurrencies, including bitcoin:

“Stalkcoins have many characteristics of crypto assets, but they stabilize the price of a“ coin ”by linking its value to an asset pool.”

Which, of course, is fundamentally wrong, because by virtue ofIn essence, it is incorrect to compare both assets in principle. Nevertheless, do not rush to blame the G7 working group for this misconception due to the large number of publications and materials that do not correspond to the real situation.

After all, at one time, Coinbase also claimed that its stablecoin had “all the benefits” of a cryptocurrency. Of course, true crypto enthusiasts cannot be confused:

“Claims that the stablecoin USDC has “all the benefits of a cryptocurrency” should be taken as a transition from marketing to a simple lie (via https://www.coinbase.com/usdc)

The idea of ​​Bitcoin was to make transactions that cannot be carried out with the help of such regulated systems as banks and US dollars. ”

According to the idea of ​​its creator, Satoshi Nakamoto, Bitcoin is designed to eliminate third-party storage of digital money:

“Internet trading has become almost entirely dependent on financial institutions acting as trusted third parties that process electronic payments,— wrote Nakamoto in the Bitcoin White Pages.

Although the system works well enough for most transactions, it still suffers from the flaws of the trust-based model. ”

Third party exclusion impossibleusing stablecoins, as they are secured by traditional assets that are tightly controlled. Thus, behind every stablecoin is a bank account or vault with a small amount of gold.

Projects that try to create more decentralized versions of stablecoins, such as MakerDAO on Ethereum, in one way or another are based on some degree of centralization.

This factor is often overlooked throughoutaltcoin market. It is still not entirely clear whether the definition of “cryptocurrency” should apply to centralized assets such as XRP, Ripple’s token, or Facebook’s Libra project.

To illustrate the problems of centralization,related to stablecoins, the report of the G7 working group describes how, before their creation, projects of this type should be approved by the regulatory authorities:

“For stablecoin developers, a strong legal frameworkframework in all relevant jurisdictions and legal clarity for all participants in the stablecoin ecosystem — coin holders and issuers is an absolute prerequisite."

Facebook representatives responded to this report,that they are ready to work with regulators. The creation of Bitcoin was announced in the mailing list about 11 years ago, its launch took place a few months later. As you can see, Satoshi did not ask for any approval.

When asked if Bitcoin should be considered sustainableto the opposition on the part of the government, a clear answer is not so simple. Currently, there are problems associated with the centralization of mining, lack of confidentiality and exposure to political or social attacks. However, at least two members of the US Congress consider it impossible to ban Bitcoin.

New G7 Working Group Report Endsa statement that Bitcoin failed, "failing to become a means of payment, having suffered from unstable prices, scalability restrictions, complex user interfaces and problems in the field of management and regulation.

Thus, crypto assets have become a class of speculative assets for those engaged in illegal activities. ”

Contrary to this conclusion, Bitcoin is growing almostby all indicators — transaction volume, payments, prices, hashrate, etc. Despite its volatility, over the past 10 years, Bitcoin has objectively served as a much better store of value.

If we talk about volatility, then this factIt is an illustration of its decentralization and uncontrollable nature. It is not affected by the actions of the authorities regulating the money supply, however, they directly affect the stability of the stablecoins.

With regard to utility as a means of payment, progress is achieved with the help of scalable solutions of the second level, such as the Lightning Network.