Home / Crypto Currency / Op-Ed: Do Blockchains Need a Native Currency?

Op-Ed: Do Blockchains Need a Native Currency?


Blockchain

Advertisement

Get exclusive fiat and cryptocurrency analysis on Hacked.com for just $39 per month. Click here now!

Like most administrators in top banks and other financial institutions across the globe, the governor of the Bank of Spain, Luis María Linde lent his voice towards the criticism of cryptocurrencies despite showing support for the underlying technology, blockchain.

Linde believes that the risks associated with cryptocurrencies outweighs the benefits therein by a lot but believes that blockchain technology has the potential to improve efficiency and reduce operational cost.

He said:

“In my opinion, their current use (of cryptocurrencies) presents more risks than benefits: they have low acceptance as a means of payment, suffer extreme volatility, present multiple operational vulnerability and have been related to fraudulent and illicit activities in many cases.”

Blockchain vs Cryptocurrency

Acknowledging the benefits that blockchain technology offers, especially in the areas of financial solutions, is an idea that is growing in popularity. Several top banks and financial institutions are already testing and implementing blockchain solutions. Recently, it was reported on CCN about the several blockchain patents acquired by the Bank of America, among other top companies.

Despite these acquisitions and implementations, these traditional institutions do not hesitate to criticize the associated elements that fuel the technology, cryptocurrencies. This resuscitates the question – how far can blockchain go without cryptocurrencies?

This debate has continued over the years and across institutions and organizations. However, in order to determine how implementable any of these opinions are, depending on which side of the divide anyone belongs, there has to be a proper definition of what each entity represents.

Blockchain Variations

In its simplest form, blockchain is defined as a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. A more general term that can be used to describe bitcoin and cryptocurrencies is “tokens.” Hence, blockchains are fundamentally powered by underlying tokens that may eventually become cryptocurrencies depending on their liquidity and ability to be exchanged with other cryptocurrencies or fiat currencies.

Down the road, we have been confronted with organizations that insist on blockchains that are restricted in their own rights. These category of blockchains are referred to as private blockchains.

The main dissimilarity between a private and public blockchain relates to who can participate in the network, make transactions, maintain the ledger and see the records. Public blockchain networks are open to anyone and even have mechanisms meant to encourage more people to join the network, similar to bitcoin and other digital currencies. On the other hand, private blockchains offer limited access to authorized members only.

A Matter of Control

bitcoin price
Source: Shutterstock

Most cryptocurrency enthusiasts and propagators of public blockchains insist that main reason why traditional institutions remain critical of cryptocurrencies is because of the control that they cherish so much rather than for purposes of objective regulation. Even though the technology is still in its emerging stages, blockchain so far is generally perceived as a decentralized, democratic and self regulatory technology.

Considering the democratic nature of blockchains and noting the fact that the network sustenance involves individual computers that need to be motivated, cryptocurrencies remain relevant incentives and also the medium of transaction. For this reason, truly decentralized blockchains depend on cryptocurrencies to stay alive. Hence, running a private blockchain simply implies maintaining an enclosed network while deliberately neglecting any economic value that its tokens may offer. Give or take, someone must bear the cost of maintenance.

Apparently, when top executives like Linde express their criticism of cryptocurrencies, it can be interpreted as a show of concern towards how such elements of value can be regulated in the future — not a denial of the existence of a functional value for blockchain tokens.

Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to CCN.

Images from Shutterstock

Follow us on Telegram.
Advertisement
Read more

Check Also

VeChain Hype Intensifies With Major Partnership and Mainnet Launch

VeChain has gained support from new partnerships with DB Schenker and PwC, ahead of its highly anticipated mainnet launch. VeChain in Last Stages of Preparation Before Mainnet Launch VeChain has posted their official launch schedule to Twitter comments are a mixed bag of congratulations and questions about how to convert existing VEN to the new VET token. The VeChainThor Blockchain is days away from being unleashed. Please review the following timeline and be prepared to witness Blockchain X! pic.twitter.com/kxlQkcc6PI — VeChain Foundation (@vechainofficial) June 21, 2018 Once the launch takes place most exchanges are expected to handle the token conversion, swapping the ERC20 VEN tokens to the new VET symbol. Users should look for a message from their exchanges that they are on board and ready to make the change. For those keeping their tokens in their own wallet and don’t plan to transfer them over to an exchange for the mainnet launch, there’s another way to manage the exchange. Once the mainnet is launched any VEN tokens can be transferred to a new wallet to be released by VeChain that will effectively make the swap from VEN to VET for the owner. After the swap, every single VEN token will be converted to 100 VET. This is designed into the mainnet launch to facilitate smaller transactions, as well as some of VeChain’s use cases such as IoT. For example, VeChain is currently being sold at 3.10$ per unit, after the swap the VET unit is being traded at the price of 0.31$ per one unit. Though the change creates more coins for the user the overall fiat value stays the same. VeChain understands that the token swap will take some time to complete, so they will allow VEN and VET to coexist for a while so that all holders would have enough time to get through the process of the transition. After the mainnet launching, all exchanges for VET will be closed. Investors can book trades on their exchanges but the price won’t be available until the first trade of the newly swapped coin is processed through an exchange that had listed the VEN token. VeChain Set Up for the Future On it’s run up to the mainnet launch VeChain has sealed two major deals that should ensure a solid future for the Chinese company through the current unstable market. “Big Four” auditing giant PricewaterhouseCoopers (PwC) recently lent support to the company through an investment and DB Schenker, a logistics division of German railways has partnered with VeChain to develop an application poised to transform the global logistics ecosystem. As of the time of writing the mainnet is set to launch in 8 days. The post VeChain Hype Intensifies With Major Partnership and Mainnet Launch appeared first on NewsBTC.

Leave a Reply

Your email address will not be published. Required fields are marked *

Disclaimer: Trading in bitcoins or other digital currencies carries a high level of risk and can result in the total loss of the invested capital. theonlinetech.org does not provide investment advice, but only reflects its own opinion. Please ensure that if you trade or invest in bitcoins or other digital currencies (for example, investing in cloud mining services) you fully understand the risks involved! Please also note that some external links are affiliate links.