Given the restrictions due to the coronavirus, many businesses have opted for payment with cryptocurrencies. This boom in digital money has caused some fear, on the part of central banks and governments, that large companies will implement monetary systems parallel to sovereigns. Some experts even point out that the dollar is going to lose its status as a world reserve currency and that it will be replaced by the bitcoin or another cryptocurrency. Will cash finally disappear?
Herminio Fernández, CEO of the Eurocoinpay platform, talks to Bolsamanía about the development and advantages of this payment gateway, as well as the evolution and importance of cryptocurrencies at the present time.
What role do cryptocurrencies play in a current situation marked by Covid? Do you think that they will finally be implemented as a definitive payment method replacing the traditional one?
Cryptocurrencies are playing an important role today. It is a way of charging, it is a very disruptive form of payment and it is a way of evolving and moving forward. Little by little they will be integrated into the system and they will also eat the market of traditional money and the fiat money that we know today.
The world's main central banks consider that, if they issued their own digital currency, it should coexist with cash. Do you agree?
No, in my opinion it will not be like that. First, because central banks, and especially governments, intend to eliminate all the cash that there is in order to control all users, that is, to be able to eliminate fraud, money laundering and especially B money (black money) . I believe that, in a short term, between 8 and 10 years, practically all the cash will disappear and what they call 'CBDC' will appear right now, which are the euros or digital dollars that are already being developed by all central banks, such as the Fed (Federal Reserve of the United States), the Chinese Bank and the European Central Bank. I do believe that cash will disappear very soon.
Large companies like Facebook want to be issuers of currencies that serve as a real means of payment. Do you think this can break the status quo and establish monetary systems parallel to sovereigns (those of central banks and governments)?
Both Facebook and all the companies that work with cryptocurrencies are trying to achieve a system that is complemented with the centralized money that we know today. In these companies the proposal consists of returning the sovereignty of the money to the users, something that was snatched in 1913 when the Fed imposed the dollar as the single currency in a unitary way. I believe that what is intended is to decentralize the power of money. Therefore, little by little these currencies will be implemented and will be complemented with centralized money from central banks and governments.
The Financial Stability Board (FSB) sees a potential risk in the massive adoption of 'stablecoins' (among the main threats, they consider that a wide use of 'stablecoins' as a store of value would expose its users to risks in the event of fluctuations in the value of the currency). What do you think about these cryptocurrencies?
I think that right now there is high volatility in the world of cryptocurrencies. But they act as a good store of value. When an innovation arrives that you want to implement as a means of payment, until it is achieved there is a great fluctuation. Little by little, the world of cryptocurrencies, or for example bitcoin, is eating gold 'market cap' at a giant pace. It does not pose any risk to users because they can take refuge in a 'stablecoin', which already has a reference as a value. A 'stablecoin' is always referenced to the dollar, gold or the euro, and that is a guarantee for anyone who wants to invest in a store of value. I really don't agree that you take a lot of risk when you start investing in cryptocurrencies.
Some experts suggest that the dollar will lose its status as a world reserve currency and that it will be replaced by bitcoin or another cryptocurrency, what do you think?
I think they are right. We all know that dollars are being created without any backing. It is simply a promise to pay. In addition, there is a great inflation that will bring its consequences shortly. The money we know today, the fiduciary, is money that carries a huge mountain of debt and that practically no country knows how it is going to deal with it. What is going to happen, possibly, is that there will be a reset of all this money that we know, and that many users are going to take refuge and trust more in bitcoin and these currencies than in fiat money.
There is a lot of talk about bitcoin, but there are also other interesting cryptocurrencies for investors, right?
Right now there are value propositions with very important currencies such as Zerium and its smart contracts, or the Internet of Things (IoT) that we are developing right now and that, through sensors, anyone can make micropayments and nanopayments when you fill up gas or in a supermarket. These new coins are a great value proposition and I believe that they will be integrated into the cryptocurrency system.
When do you think this great technological revolution (digital money) will definitely be implemented in the market? Are we facing a slower revolution than was thought in 2017?
No, I think that when a new technology arrives it takes time because there is a rejection. For example, monopolies or companies that are already established and have been managing and controlling certain sectors for a long time, do not see well the arrival of an innovation or a technology that can compete with them. But I think all of that is going to break down as it did in the seventies. When computers arrived, it was thought that they were only for gaming and look what they are today, without the Internet we could not see the world. I believe that the same will happen with cryptocurrencies, that in a period of eight to ten years they will be integrated and will be operating practically in 80% or 90% of the market.