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Screenshot of a breaking news alert e-mail from Q2 2017
ETH News reported that on October 16th, the President of Brazil’s Central Bank, Ilan Goldfajn, berated bitcoin as a “bubble” and a “pyramid”. Brazil seems to be the next country to enter the “bitcoin conspiracy” theory that the digital currency may be a fraud and illegal method of accumulating value over time.
While the technology behind bitcoin, blockchain, has undoubtedly disrupted a series of industries like banking, real estate, healthcare and even agriculture, the issues with paying taxes and the lack of government control over bitcoin seem to be insurmountable hurdles for many countries, like China, Russia and now, Brazil. Another worry is that bitcoin, because of its decentralized structure, may be used to finance terrorism and money laundering schemes. The latest scandal with the biggest bank in Australia, the Commonwealth Bank, is one of the latest examples how a huge money-laundering scandal can attract the attention of financial regulators on paying more attention to bitcoin, its potential use and overall, its development.
In the words of Mr. Goldfajn and ETH News:
“The central bank is not interested in bubbles or illicit payments. This is not something the [Brazilian] central bank would like to encourage added.”
One thing Goldfajn noted, however, is that the technological value and innovation that cryptocurrencies bring can be separated from the insecure nature of digital currencies. According to Matthew de Silva from ETH News:
“In August 2017, Banco Central do Brasil published the results of a real-time gross settlement system study, which examined prototypes of blockchain platforms, including the Ethereum-based BlockApps and JP Morgan’s permissioned implementation of Ethereum called Quorum.”
With more countries sharing their “fear” of the unregulated and decentralized nature of bitcoin and other cryptocurrencies, there is no clear future about the development of digital currencies and most of all, their popularity among financial institutions, regulators and central banks.