Certainly the understanding of the scope of bitcoin as a monetary solution is growing. More and more government institutions are showing this. This is the case of the Bank of Finland, which issued a report on September 5 praising the complex infrastructure behind Bitcoin, which avoids the manipulation of unethical agents.
Three economists working for the Bank of Finland, Gur Huberman, Jacob Leshno, and Ciamac Moallemi, asserted that Bitcoin is really a revolutionary currency system. They also point to the great power behind cryptography to prevent threats of manipulation or neglect. This is due to the fundamental features behind the blockchain technology that provide an open book so that all users can see what happens transactionally and thus decentralize the software.
All conclusions can be found in a report published by the Bank of Finland on 5 September. The report offers a thorough analysis of Bitcoin, while providing readers with an in-depth understanding of how currency works. The driving force of the report compares centralized payment forms (Fed Wire, Swift, Visa and Paypal) with those of Bitcoin. Entitled as “Monopoly without monopoly: an economic analysis of the Bitcoin payment system”, the article explains itself. The three economists explain in the same way that Satoshi Nakamoto conjectured in his initial report, how Bitcoin works, “in the absence of a governing organization.” Instead, there is a unique protocol that all users and miners respect and therefore “blockchain carries an economic innovation.”
One of the main reasons why monopolies should be regulated is because officials must “prevent or mitigate their abuse of power.” The centralization of money in the world’s major banks and investment firms has already been described as a major problem. The 2008 global financial crisis is a good example of this, and coincidentally, it was the same year that Nakamoto published his article introducing Bitcoin.
Also because of the inability of the blockchain to be monopolized, the three economists agree that Bitcoin does not need to be regulated either. The report concludes ultimately, to the displeasure of China for example, that “Bitcoin can not be regulated. There is no need to regulate it because as a system it is committed to the protocol as it is and the transaction fees it charges to users are determined by the same users regardless of the efforts of the miners. ” The report concludes that Bitcoin’s economic system is revolutionary and that the network of blockchains merits further study by economists because of its usefulness and functionality.
The context in which this report is produced is also interesting. With bitcoin’s value dropping some significant points in recent weeks, the Bank of Finland may have given enthusiasts a light in the dark. Although China has announced a complete reluctance to embrace the currency, many countries are pursuing their own goals. As Vietnam, Australia, Canada and others turn to economic innovation, it is clear that there is a growing interest in a change in the way the world does business, and that trend is already breathing in the global environment.
