The International Monetary Fund recently documented the prospects held by crypto industry. The IMF organization’s suggestion has stirred the orthodox economists and the crypto community.
The proposal argued about applying a strategy to tax bank credits instead of permitting them to collect interests. It also signaled that the introduction of negative interest rates was not unusual during financial crises. Theoretically, it will encourage masses to expand instead of saving it.
This idea was not appreciated by the crypto community. Majority signaled that by boosting expends, the hangover can be put on hold. The model is only applicable to a cash-free society.
Government bond earnings are ten percent (10%) below than it was in the 80s to approximately two and a half percent (2.5%) in 2019. If the trajectory is followed constantly, it is expected that the US will observe near-zero interests. This might be linked to zero or negative interest rates on tradable credits and other savings.
Effectively compelling the public to expand, the principal banks will guarantee a temporary inflow of capital in the market. But, a number of economy and finance experts approve that this would be detrimental to the economy.
The crypto community has also expressed concerns about the loss of financial freedom and has suggested an alternative – Bitcoin.
Others have recommended outdated alternate resources i.e. gold, art, real estate, etc. However, they do not propose benefits similar to that of crypto. It provides mobility, speed, cost-effectivity, store value, cash substitution.
Unlike cash, Bitcoin is reflected as deflationary. The entire number of bitcoins in circulation can be 21 million BTC and can be mined every four years.
Bitcoin can avert state governments from the convincing public to conform to the fiscal guidelines that do not assist the person’s benefits. If banks start imposing negative interest on deposits then citizens will effectively lose a percentage of their savings every year.
Holding bitcoin and other cryptocurrencies in such scenario could prevent people from being the victims of negative interest rates. Activities like these provide more motivation to adopt crypto and enjoy freedom.