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Alternative Market Briefing

Bitcoin has a future as long as there is a need for additional money supply

Monday, March 31, 2014

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Izabella Kaminska
Benedicte Gravrand, Opalesque Geneva:

Izabella Kaminska, an avid Bitcoin blogger, talks to Sona Blessing on Opalesque Radio about whether virtual currencies such as Bitcoin could be the future of money.

The emergence of a virtual currency industry is very important and very "specific to these times," she says. She believes it is a factor of the endogenous need for money. As there is not enough money in circulation, the system self-corrects and creates its own money supply. Bank credit is also a money supply, but it is subject to terms and conditions of return that are getting harder to achieve. "There is a need for endogenous money supply that’s completely condition-free," she adds. "That, in a way, is virtual currency."

Bitcoin has a future as long as there is a need for additional money supply, which comes from the deflationary environment (deflation – the opposite of inflation – being a general decline in prices, often caused by a reduction in the supply of money or credit, or a decrease in government, personal or investment spending).

When prices stabilize and even if we see signs of inflation, and money stops being a zero-rate currency, there will be a reversal in the virtual currency trend as it won’t be so attractive anymore.

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