ING economist urges bitcoin protocol to include central bank elements

Bitcoins and other peer-to-peer virtual currencies are popular due to a lack of a central power. Over the years, a large amount of people have become discontent with the destructive policies of central banks that have hurt national currencies and the overall economy. This is why bitcoiners have continually asserted that digital currency will destroy the United States dollar and others.

According to one ING economist, the bitcoin protocol could be improved in the future if it were to incorporate control over digital currencies and implement functions in the same way that central banks operate currencies.

In a 1:50 eZonomics financial educationa video clip, Teunis Brosens of ING, a multinational banking firm based in the Netherlands, put forward the idea that bitcoin will only be as successful as conventional fiat money by maintaining an algorithm that “smoothly matches money supply and demand.”

This, he says, would become popular in the marketplace and potentially lead to eligibility of the Nobel Prize in economics. Brosens added that the financial institution thinks bitcoin only meets one of three criteria in regards to traditional currency because of its paucity of regulations and price volatility.

ING“Real currencies dampen these fluctuations by regulating money supply and prices through interest rates, but it is an explicit goal of bitcoin to do away with central authorities,” added Brosens, who cited several fluctuations in the digital currency’s less than five-year history. “Money is a means of exchange, unit of account and store of value. Cryptocurrency may take the first box if it is accepted more widely, but the second and third are problematic because the value of bitcoin is very volatile.”

When discussing price volatility, bitcoin has remained relatively stable over the past few weeks. Bitcoin has held steady at around the $620 mark for a couple of weeks now.