Cryptocurrency as a Possible World Currency: Controversial Aspects

Abstract:

The purpose of this article is to answer a question: сan cryptocurrency take the place of a major world currency? I study this issue because of economic agents tend to apply that currency, which is used by others in a currency circulation. Therefore, there is a tendency of a transition from the international currency system with a set of international currencies to a system with one major world currency or to a system with a small number of international currencies. The first part of the article determines requirements to the major world currency. The second part of the article studies to what extent cryptocurrency conforms to these requirements. The final part describes the characteristics of cryptocurrency, which will allow it to take the place of the world currency. To analyze economic processes, the author applied the system approach as well as the methods of scientific modeling, comparison, and grouping. The analysis has shown that cryptocurrencies existing now cannot take the place of world currency, as they do not conform to many requirements. But at the same time, cryptocurrency as a world currency has competitive advantages over national world currencies. It is decentralized; therefore, when changing the country-leader, other countries can support it. Moreover, it is not a national currency; therefore, its volume is not connected with monetary policy of any country. These benefits give a prospect to cryptocurrency to become a world currency if in other properties it will be as good as modern international currencies. Therefore, in order that cryptocurrency has taken the place of steady world currency, it has to go under certain changes, which presented in the last part of the paper.