Cryptocurrency has become not just a technological feat but the embodiment of money. Cryptographic money is computerized cash. That implies that there is no physical coin or bill — it is all on the web. One can transfer cryptographic money to somebody online without a go-between, similar to a bank. Bitcoin and Ether are notable cryptographic forms of payment; however, new digital types of money keep being made. The boldest unprecedented innovation, Bitcoin, hit economics, presenting the most stable ever seen currency. The article titled “Cryptocurrency and the problem of intermediation” discusses the vital point of crypto development. The purpose of this paper is to identify the objectives, approach, methodology, and other details described in the given article.
The article primarily sets as its objectives the need to indicate the mechanisms of cryptocurrency and identify how it is different from other currencies. Moreover, the paper seeks to investigate possible obstacles, track Bitcoin’s development, and evaluate specific schemes concerning currency purchasing. What is more, the paper explores whether cryptocurrency can become the national currency and suggests limitations and regulations for that. A for the main methods, several can be identified (Harwick, 2016). First, the author uses empirical observation, data analysis, and comparison. For instance, the author profoundly investigates the history of this currency’s appearance, discovers its development stages, and describes its main trait. Thus, the author suggests that the currency is portable, durable, secure, and divisible.
Further, there is a comparison concerning gold and Bitcoin, and the author again refers to the past events that influenced the present situation. When comparing these, Harwick (2016) mentions that gold, unlike Bitcoin, has fewer hurdles in emerging as the constant and valid currency. Moreover, he examines some future impediments standing in the way of cryptocurrency becoming a national currency. When exploring these aspects, Harwick (2016) alludes to historical occurrences, for instance, “even the so-called Price Revolution, during which prices in Europe more than doubled following the discovery and importation of New World silver and gold” which lasted for quite a long time (p. 577). Nowadays, however, individuals may utilize digital forms of money for payments and keep away from exchange expenses. Some may get numeric types of money as a venture, anticipating the values goes up. One can purchase cryptographic cash with a Visa or, at times, get it through a procedure called “mining.” Cryptocurrency is put away in an advanced wallet, either on the web, on the PC, or other equipment. A digital money’s worth can change continuously. A venture that might be worth a great many U.S. dollars today may be worth just hundreds tomorrow. On the off chance that the worth goes down, there’s no assurance that it will go up once more.
The first approach Harwick sticks to is systematic, which implies selecting the best evidence and compiling them into one research to analyze the event and make evidence-based conclusions. Therefore, Harwick resorts to many studies that contributed a lot to the investigation of cryptocurrency and its inner and outer influence. Among the contributors are Bordo, Dowd, Enge, and others who dedicated their papers to cryptocurrency in the modern world. The systematic approach also involves using statistical data; therefore, there is a graph reflecting the statistics of daily change in Bitcoin-dollar exchange. Numerical information is efficient in analyzing two counter currencies.
Moreover, the paper identifies the possible threats or problems that are based on its current state. Among the primary barrier, the author differentiates between technical and institutional ones. According to Harwick (2016), “in addition to the intrinsic network hurdles, regulatory uncertainty and hostility also constitute an extrinsic hurdle for intermediation in a way that they do not for the protocols themselves” (p. 579). Here, the author also underlines that the cryptocurrency technically may serve as a reserve currency, but there is a risk of protocol fraud.
Then, the alternatives to intermediation are described by exemplifying the value of money represented by different means. The author suggests that intermediation is likely to define the value of base money than vice versa (Harwick, 2016). Furthermore, the “intermediation, then—in particular intermediation carried out by large-scale specialists—is not merely a means to achieve MV stability in pursuit of monetary equilibrium” (Harwick, 2016, p. 583). Thus, maybe, intermediation gives off an impression of being valuable to exploit any benefits that MV dependability apparently offers.
The conclusion is marked by the author’s statement that the existence of a cryptocurrency prevents any a priori statement about the impossibility of solving the problem. Among the main findings is the fact that any opportunity for cryptocurrencies to suddenly displace the national currency exchange rate is likely to coincide with the easing of restrictive regulatory measures. In terms of political economy, it may be useful to have a cryptocurrency with stable purchasing power to allay concerns about its adoption. In general, the recommendations suggest that the cryptocurrency will not be eradicated because it is well-positioned now; however, the hurdles still exist and are unlikely to disappear.
Reference
Harwick, C. (2016). Cryptocurrency and the problem of intermediation. The Independent Review, 20(4), 569-588.