The former Greek finance minister said that if bitcoin replaces ordinary money, it will lead to” feudalism ” and economic disaster. However, he supported the digital currencies of central banks.
In a recent interview, Yanis Varoufakis said that the strongest side of bitcoin is its limited supply, which is 21 million coins. However, this is also the biggest “weakness” of the first cryptocurrency, since due to limited reserves, bitcoin will not be able to become a full-fledged replacement for fiat currencies.
The former finance minister believes that money is always connected with politics, and much depends on whether it will be democratized or not. According to Varoufakis, supporters of bitcoin, who believe that it democratizes money, are greatly mistaken.
“The lack of a democratic mechanism to determine who receives these coins and in what quantity will contribute to the development of modern “feudalism”. The power will be in the hands of the first followers of Bitcoin, ” Varoufakis said.
According to him, the fixed supply of bitcoin indicates its unsuitability during the economic crisis. Despite the fact that supporters of this cryptocurrency call “money printing” one of the main disadvantages of the existing monetary system, governments often resort to such measures to solve any emergency situations. Varoufakis is convinced that governments around the world should be able to increase the supply of their currency.
“Let’s assume that bitcoin magically replaces all paper money. This will be a disaster. What will happen if there is a need to increase the money supply during a pandemic? It will not be possible to do this with bitcoin, so it will never be able to become a currency, ” said the former Greek finance minister.
Varoufakis noted that even stablecoins are not suitable for use as currencies. However, digital currencies of central banks can “revive” payment systems. First of all, they will eliminate intermediaries, including private banks that charge a commission for “inaction”.
Since state-owned stablecoins operate on the basis of the blockchain, they can work efficiently and autonomously, without the participation of third-party banks. In turn, these banks will be able to focus on providing “real” services to their customers. In addition, when using these assets, users will be able to maintain their privacy.
“Digital currencies of central banks are the right way to “kill two birds with one stone”. For example, if you want to buy a book on Amazon, why should a private bank be involved in this transaction? Why should he take a fee if he does nothing? Banks charge fees because they have a monopoly on the payment system, ” Varoufakis said.
Note that the investment bank Goldman Sachs adheres to a similar position regarding bitcoin. The bank recently stated that bitcoin cannot be considered a certain asset class, since it does not create cash flow and does not reduce the risk of inflation.