The inherent risks of crypto currencies – When bitcoin meets China’s CBDC

Cryptocurrency anonymity, notably in the case of bitcoin, comes without any recourse to or protection against theft, loss or other forms of financial crime. This creates an inherent risk which the crypto market is trying to fix. Ironically, the potential solutions bode ill for cryptos by destroying their untraceable anonymity.

Longer-term, the bitcoin ‘protest’ may force sovereign states to improve their macroeconomic management and strengthen the framework of their institutions. Cryptos could be marginalised by the rise of central bank digital currencies characterised by ‘controllable anonymity’, as per the Chinese model.

Bitcoin – A new type of institutional arrangement

The cryptocurrency fever has made financial headlines, with bitcoin’s price surging and a debate raging over the emergence of cryptocurrency technology. These may, however, be a sideshow within a major, developing trend of China’s digitalisation, including renminbi…