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die bank: On the one hand, the bitcoin hype doesn’t seem to be ending. On the other hand, cryptocurrency is still far from being accepted by customers and merchants at the checkout as an alternative to bills, coins and cards. Why?

Stephen Shepherd: One could ask the counter question: Why should customers and merchants actually accept the so-called crypto “money”? A well-functioning monetary system already exists. With cash and book money, i.e. the current account balance, consumers have two very convenient payment options. This is a well-established system, which is accordingly displayed on the dealer’s website. The question is whether cryptocurrencies can provide a significant improvement in payment transactions. Why should a customer get a bitcoin wallet when they can easily pay with their mobile phone, card or cash?

die bank: Can cryptocurrencies even be called real currencies?

Shepherd: The classical currency is the basis of the state’s monetary system. Crypto values ​​certainly do not fulfill this function. Following the subject of the first semester of economics, the question to be answered is whether crypto-values ​​fulfill the three classic functions of money: medium of exchange, unit of account and store of value. Medium of exchange means whether you can conveniently and effectively use the currency as a means of payment. Unit of account means: If you calculate in these sizes, are values ​​determined in these sizes? Great value implied: Can you save with currency? Could it work as an interesting investment or credit facility?

The final breakthrough of the so-called crypto “money” is failing right now – apart from the fact that we already have a well-functioning established system – primarily due to the lack of security and predictability. In the case of Bitcoin, the price fluctuated between 20,000 and 60,000 euros per Bitcoin in 2021, i.e. a factor of three. Can companies build their cash reserves on such an unstable foundation? The traders would put something in the register as it is unclear what it will still be worth the next day or in the coming week. To summarize: Cryptocurrencies do not provide any advantage for everyday life, but they have a major disadvantage, namely the extremely high volatility.

die bank: What future do you think Bitcoin and Co have?

Shepherd: I’m generally quite skeptical here. But in the history of technological development, the skeptics have often been taught a lesson. In the late 1990s, senior representatives of the book industry prophesied that book sales via the Internet would always remain a niche phenomenon. This forecast has not come true. Therefore, I would like to be a little careful here with my skepticism. New technologies often change the world, but not necessarily in the way previously thought.

It is therefore conceivable that blockchain technology will not necessarily succeed in the field of money, but in other sectors – whenever secure digital documentation is required. The examples range from digital securities processing and securities trading to digital land registers or digital vehicle registration documents. I could imagine that the blockchain technology will find its areas of application, but that these will ultimately lie outside the financial sector.

Sir. Schäfer, thank you very much for the interview.

Dogan put the questions to Michael Ulusoy.

The interview is an excerpt from the podcast “Are Cryptocurrencies Real Currencies?”

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“Are cryptocurrencies real currencies?” What future does Bitcoin and Co have? Listen to the podcast from the series “through the bank” with Prof. Dr. Stefan Schäfer from the Rhein-Main University of Applied Sciences in Wiesbaden.

If you are interested, register for our hybrid conference “Future Payment Transactions 2023”.

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