A report recently published by Goldman Sachs illustrates how bitcoin and cryptocurrencies could be used as alternative forms of money in troubled economies.
The report, written by Goldman strategists Zach Pandl and Charles Himmelberg, highlights that the U.S. dollar’s usage by other nations means there is a demand for a store of value and medium of exchange that can be used across national borders, according to Bloomberg.
To quote the report:
“In those countries and corners of the financial system where the traditional services of money are inadequately supplied, bitcoin (and cryptocurrencies more generally) may offer viable alternatives.”
However, according to the report, cryptocurrencies as they exist now, would not be ideal while they are driven by speculation and are experiencing such volatile prices.
Pandl and Himmelberg wrote:
“Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits,”
National cryptocurrencies should be thought of as assets similar to gold or other metals to be viable, they added.
And while no country has actually launched its own cryptocurrency yet, some governments have made steps towards doing so.
Venezuela’s President Nicolas Maduro announced last month that the country would create its own token to help its economy. However, officials in the country, including the opposition-led national legislature, have strongly pushed back against the idea.
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