Hot Topic: Digital Currencies – A Question of Trust

Will people’s trust towards digital currencies dramatically increase in the future? 

The dramatic rise and fall of Bitcoin in recent times has brought the existence of virtual currencies into the eyes of the wider public. And with this attention has come questions, specifically from regulators, with regards to the functionality of the virtual currency. How does it work? Who backs it? What is its worth based upon? How should it be regulated? What all of these questions come down to in the end is people’s general relationship with money, be it in paper or digital form. It boils down to a question of trust. A more pertinent question perhaps is will people’s trust towards virtual currencies dramatically increase in the future?

Professor Dr. Ron Berndsen, Head of the Oversight Department of De Nederlandsche Bank and Endowed Professor of Financial Infrastructure and Systemic Risk at the University of Tilburg, is in the process of examining the role of virtual currencies in today’s world. In 2011 he created the concept of a Payments Warehouse entitled “What is happening in Scrooge Digiduck’s Warehouse?” to describe the interlocking methods of modern payment systems. He is currently working on where virtual currencies sit in juxtaposition to his Payments Warehouse, a challenge considering how rapidly the landscape of Bitcoin has altered during the first few months of 2014.

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