Technological plan for cryptocurrency

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I’m interested in exploring how cryptocurrency affects money. We all know that as everything is becoming digitalized, we might not be using money anymore. Also, COVID-19 is another reason people are trying to avoid contact and digitalize more and more things. The cryptocurrency is affecting the economy in a way that it’s completely decentralized, which means that for citizens living in countries with currency instability, cryptocurrency allows them to trade freely across borders with citizens of more well-off countries, creating a level of economic equality.
Consider the case of Venezuela, where monetary mismanagement has brought misery and insecurity to its people. In the past, Venezuelans would have had very few options to attempt to save some value. And those options would have been unevenly distributed, with wealthier individuals more able to protect their assets than those in the lower classes. Today, many Venezuelans of all classes turn to Bitcoin and other cryptocurrencies to protect themselves against the ravages of extreme inflation and bad governance.
Do people think if their money is worthed to be saved in the banks? How much interest do they get? If they go to another country, they don’t need to exchange different currencies; they can trade with digital money. So my main question to explore would be how cryptocurrencies affect monetary policy?

Professor response:
I like the path this is going. There is definitely good and bad with this. Digital currency does bring a lot of convenience, but if it’s something other than bitcoin, it means that every transaction can be monitored. Our Fed doesn’t like this, especially because they are running fast to create a digital dollar. That’s why we’ve seen such instability in the crypto market. There are also other concerns that if the US (just as an example) decides to go to a digital USD, then what does a conversion rate look like? Would it be 1:1 or do we need to worry about a redistribution of wealth? Think how easy it would be for this to happen. If we look at history, every time the US has converted currency, the citizen LOST money. We have a finance person in the class — I’d love to get some thoughts on this. Just recently, Chase Bank refused to do business with General Flynn’s wife because of “reputational concerns”. If we hold nothing physical in our hands, what is to stop a government or closely connected NGO from deciding they don’t like something about us or controlling what we have access to purchase or not? As we’ve already begun to see, access to information is being restricted, our big tech giants yield tons of power to turn a business off overnight. It may not be such a far stretch to think we’re in for more nefarious things. So I think this is a great topic if you can explore the various angles.

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