Will State Cryptocurrencies Boost Bitcoin?

The efforts of the central banks have made one thing very clear: From an economic perspective, this is not about Bitcoin. It's about the danger posed by Libra. It is about the possibilities of saving on cash logistics. And it is - unfortunately - about the surveillance of citizens.

Against this background, Bitcoin should actually find fertile soil in which a new bull market can flourish. The story of Bitcoin as a store of value, of "digital gold", becomes more credible with each crisis. It's also simpler and better digestible for the masses than the hype about blockchain, from which, apart from Bitcoin itself, not many useful applications have emerged so far.

The combination of these factors should make for a good year for Bitcoin. Even though we do not know when the downward price trend will really end. In the days after the short Iran crisis, when the price of gold was long since on the way down again, the Bitcoin price did actually continue to rise. A sign of life, if you will. From a market that is still in its infancy.

Anyone who belittles the efforts of central banks in the crypto area could overlook important points. One thing is true, though: Neither China, nor the Eurozone or Sweden are planning any real competition to Bitcoin. The new digital currencies will be just that: currencies - no digital store of value.

State cryptocurrencies, which also allow state surveillance, could even drive some users into the arms of Bitcoin, Dash and Monero, which at least partially guarantee anonymity. But: "Politicians are looking to destroy this competitive advantage for non-state digital currencies by making them less secure.

Chinese media report that the state cryptocurrency is almost ready. What exactly this digital yuan will look like and when it will be launched is still unclear. According to reports, China has been working on the project since 2014. What we do know: The currency is to be put into circulation via the commercial banks in the same way as the paper currency. Users can then open accounts with these banks and use the crypto-yuan

It is a certain irony that Mark Zuckerberg, of all people, warned of precisely this development. If the West is not open to new blockchain projects like its LibraCoin, China will take the lead in this area, Zuckerberg told the US Congress: "China is moving quickly to launch a similar idea in the coming months. We can't sit here and assume that because America is today the leader that it will always get to be the leader if we don't innovate.”

Zuckerberg sees Libra as the western counterpart to China's plans, where cryptocurrency is to be combined with close monitoring of the population. But Libra is severely handicapped in the West. The scepticism is huge in the USA and in Europe.

At the same time, however, according to the Bank of International Settlements, almost three quarters of all international central banks are working on some form of digital currency.21 But: Only five projects are in the pilot phase. It is highly unlikely that a digital Euro or digital Pound will be introduced the day after tomorrow. It is true that individual countries in Europe, such as Sweden, have already made great strides on the road to a cashless society - and are therefore very interested in a state cryptographic currency.

The efforts of the central banks have made one thing very clear: From an economic perspective, this is not about Bitcoin. It's about the danger posed by Libra. It is about the possibilities of saving on cash logistics. And it is - unfortunately - about the surveillance of citizens.

Against this background, Bitcoin should actually find fertile soil in which a new bull market can flourish. The story of Bitcoin as a store of value, of "digital gold", becomes more credible with each crisis. It's also simpler and better digestible for the masses than the hype about blockchain, from which, apart from Bitcoin itself, not many useful applications have emerged so far.

The combination of these factors should make for a good year for Bitcoin. Even though we do not know when the downward price trend will really end. In the days after the short Iran crisis, when the price of gold was long since on the way down again, the Bitcoin price did actually continue to rise. A sign of life, if you will. From a market that is still in its infancy.