Cryptocurrencies have steadily increased in value and become more widely used since their creation. In particular Bitcoin price has more than doubled in 2020 and has received the endorsement of many important companies, like Elon Musk’s Tesla recent purchase of 1.5billion USD in bitcoin and MasterCard’s announcement that it will enable the use of cryptocurrencies in its network. For details see 1).
Governments have been a lot less enthusiastic about the adoption of Bitcoin and central banks have begun efforts to develop Central Bank-run cryptocurrencies to replace Bitcoin. Bitcoin’s supply is completely outside of government control at the moment, and hence central banks aren’t capable to use monetary policy through Bitcoin. If Bitcoin were to be widely adopted as a currency, this could greatly reduce the central bank’s capacity to influence economic activity. For details see 2),3) and 4).
Write an Op-Ed where you discuss the future of Bitcoin. Do you think Bitcoin is likely to become a widely used currency in economic transactions? Are you in favor or against this? Why? What should be the role of the government? Please, justify your reasoning with economic arguments.