YANIS Varoufakis has called for Central Bank-backed cryptocurrencies to solve the democracy crisis within the financial system.
The former Greek finance minister, who has lashed out at Bitcoin in the past, has always been partial to the blockchain technology that underlies cryptocurrencies.
With the likes of Venezuela and El Salvador adopting cryptocurrency on a wide scale within their nations, Varoufakis has now said that a new monetary system based on crypto could threaten the bankers’ monopoly.
“Central bank digital currencies based on bitcoin-like transparency-enhancing technologies are a promising way to achieve three objectives: liberating the payments’ system from rentiers, guaranteeing unprecedented transparency regarding how much money is plucked from the money tree, and democratizing access to the tree’s fruit,” he wrote for Project Syndicate.
There’s little doubt that Central Banks, while dismissive during Bitcoin’s earlier days, have now sat up and started to take a serious look at the technology.
Earlier this month UK Chancellor Rishi Sunak floated the idea of “Britcoin” – though he confirmed it would not replace cash.
Others have tried to stem the tide, with Turkey banning crypto-related payments earlier this year.
It mirrors progressive hesitancy with Bitcoin and cryptocurrency, to an extent. Bar a few exceptions – such as the Blockchain Socialist – the Left has let the currency and underlying technology in the hands of conservatives and right-wing libertarians.
Varoufakis, a former crypto-sceptic, wrote: “The objective of progressives must be to wrest control away from them in order to promote shared prosperity with monetary stability.”
So it’s time to take back control, says the former Greek finance minister. How can this be achieved through Central Bank-backed currencies?
First up, separate payments from the bankers’ “money tree” – with each resident granted digital accounts that allow free, fast transfers using blockchain.
The second step is to end quantitative easing and replace it with a form of Universal Basic Income. This, to Varoufakis, would avoid the “socialism for the ultra-rich” seen after the 2008 financial crisis.
“Instead of the central bank financing banks that lend to corporates, which then use the money to buy back their own shares, thus boosting their wealth without a cent of actual investment, the central bank would automatically credit a monthly sum to every resident’s account – with the government taxing, at year’s end, the receipts of well-to-do folk,” he wrote.
But why use blockchain? Many sceptics would argue that the same thing could be done using the dollar, or the pound sterling, given a little dose of Modern Monetary Theory.
To Varoufakis, it’s two key factors – resilience and trust. He added: “Any central-bank digital currency would be extremely vulnerable.
“But a distributed ledger architecture would be impervious to hacking or physical damage.
“And since the quantity of money would be set by the central bank, there would be no need for bitcoin-like mining which requires planet-endangering electricity consumption.”
Redaction has consistently backed the gradually increasing number of progressives supporting the adoption of some form of currency based on the blockchain. If Varoufakis is the latest to come aboard, we may see a domino effect.
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