Introduction
A new research paper from the Central Bank of Malaysia (CBM) has fueled discussions about the role of digital currencies, particularly XRP and Bitcoin (BTC), as possible substitutes for conventional monetary systems. The CBM report explores the principles underpinning what they refer to as modern money and its implications for Central Bank Digital Currencies (CBDCs).
Potential Role of Cryptocurrencies
According to the assessment, Bitcoin and XRP could play a significant role in the future of financial transactions, potentially serving as replacements for currency in circulation (CIC) or standard bank deposits if their adoption increases.
The paper suggests that in a future scenario, private cryptocurrencies like Bitcoin and XRP might become mainstream payment options outside the traditional banking framework, thus challenging the established CIC and deposit systems. However, the authors express skepticism regarding the viability of these cryptocurrencies, noting their inherent volatility and fragmentation as key disadvantages that hinder their integration into the current payment landscape.
Challenges of Decentralization
The research highlights that the decentralized nature of cryptocurrencies poses challenges for payment systems, as it necessitates maintaining significant liquid reserves to facilitate transactions across various digital currencies. As stated in the paper,
“the lack of a centralized authority means that the liquidity management of any given crypto platform cannot expand or shrink flexibly.”
Social Media Reactions
Despite the cautious outlook on XRP and BTC’s potential to replace traditional financial mechanisms, their mention in the CBM’s research has reignited a fervent debate on social media regarding the utility of XRP. Advocates view the CBM’s acknowledgment as a sign of XRP’s growing legitimacy, while critics remain unconvinced.
On the social platform X, discussions have emerged, with some users highlighting the importance of central bank recognition for XRP, while others countered with various critiques of the cryptocurrency’s market position.
A contentious moment arose when a user pointed to a study by Alexander Bechtel and colleagues that devalues the roles of Bitcoin and Ethereum (ETH) as viable payment methods, causing discontent among their supporters. Furthermore, another user expressed skepticism about the independence of the CBM’s findings, suggesting that they may reflect biases influenced by larger financial institutions like the World Bank and the International Monetary Fund.
This raises questions regarding the thoroughness of the research on cryptocurrency scalability and its respective advantages, given the complex backdrop of global financial influence.
