A new report published by Goldman Sachs highlights how bitcoin and cryptocurrencies could serve as alternative forms of money in troubled economies.
The report, released Wednesday and written by Goldman strategists Zach Pandl and Charles Himmelberg, highlights that the U.S. dollar’s usage by other nations means there is a demand for a store of value and medium of exchange that can be used across national borders, according to Bloomberg.
To that end, the dollar has done well – but it may not be the best currency in all cases.
As the two strategists explained:
“In those countries and corners of the financial system where the traditional services of money are inadequately supplied, bitcoin (and cryptocurrencies more generally) may offer viable alternatives.”
However, cryptocurrencies, as they exist now, would not necessarily be suitable for the purpose, according to the report, particularly in an environment roiled by speculation and volatile prices.
“Our working assumption is that long-run cryptocurrency returns should be equal to (or slightly below) growth in global real output—a number in the low single digits,” Pandla nd Himmelberg wrote.
National cryptocurrencies should be thought of as assets similar to gold or other metals to be viable, they added.
And while no country has actually launched its own cryptocurrency yet, some governments have made steps towards doing so.
Notably, Venezuela’s President Nicolas Maduro announced last month that the country would create its own token to help its economy. Yet officials in the country, including the opposition-led national legislature, have strongly pushed back against the idea.
Coins image via Shutterstock
The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].