Monday, August 28, 2017

Mexican central bank rejects Bitcoin as being a currency

It should not be surprising when a sovereign state's central bank chooses to make a public statement denouncing Bitcoin (and other cryptocurrencies) as an actual currency, but this is exactly what has occurred on Aug. 28 within the country of Mexico.

In a statement made earlier this morning by the Governor of Mexico's central bank, Agustin Carstens argued that Bitcoin cannot be labeled or accepted as a 'virtual currency' because it does not have state or central bank backing to make it legitimate.

The governor of the Bank of Mexico, Agustin Carstens, has rejected adopting ‘virtual currency’ as the legal classification for bitcoin. Carstens has argued that the term ‘currency’ comprises an inappropriate classification for bitcoin due to the cryptocurrency’s absence of central bank backing or issuance. 
The governor of Mexico’s central bank has argued that cryptocurrency should fall under the governmental domain of cyber security, and not be viewed as a ‘virtual currency’ by the nation’s regulators. Carstens stated that cryptocurrencies “are not necessarily immune to hacking”, and argued that bitcoin’s greatest utility is “the fact that it offers users anonymity” – before warning that bitcoin comprises an attractive a monetary instrument to black market entities. – Bitcoin
Ironically, Mexico should be one of the most open countries for accepting Bitcoin into their economy as a medium of exchange, primarily because their currency is right now on a high inflationary run, and their citizens reside within one of the lowest standards of living in the second world tier.

But the real truth behind this announcement is the same as with most central banks... Bitcoin and cryptocurrencies threaten their existence by removing the middleman from the monetary system.  However, since Mexico is one of the richest silver producers in the world, perhaps one day it could create its own silver backed cryptocurreny for use as money, because that alone would remove the stigma of it being a de-centralized 'virtual currency'.

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