Earlier this week, Christine Lagarde, the head of the International Monetary Fund (IMF) stated that she believes bitcoin and cryptocurrencies will eventually replace banks and existing financial systems by eliminating the necessity for intermediaries and third party service providers.
In a research paper shared by the Foundation For Economic Education, Lagarde wrote:
“For now, virtual currencies such as Bitcoin pose little or no challenge to the existing order of fiat currencies and central banks. Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked. But many of these are technological challenges that could be addressed over time. Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies.”
Bitcoin’s resilience shines around the world
As Lagarde emphasized, the vast majority of cryptocurrencies such as bitcoin and Ethereum are still struggling to solve their underlying scalability issues. Previously, in an interview with major South Korean financial news publication JoongAng, Ethereum co-founder Vitalik Buterin stated that it could take two to five years for public blockchain networks to scale with two-layer and on-chain scalability solutions.
But, once bitcoin scales to a capacity in which hundreds of transactions can be settled per second, Lagarde explained the decentralized nature of bitcoin could provide general consumers with a more efficient, robust, secure, and cost-efficient financial network as an alternative to the global banking infrastructure.