Blockchain and cryptocurrencies: essential tools in a two-tier financial system

Abstract

The announcement by Facebook1 on 18 June 2019 of its plans to launch a new cryptocurrency shook the markets and caused renewed global attention to cryptocurrencies. Facebook ‘Libra’, which will be an asset-backed cryptocurrency using the blockchain technology, is to be launched in 2020, and Facebook hopes that it will be widely accepted and be used by people to ‘… .send, receive, spend, and secure their money’.2 Libra will be supported by a basket of real currencies and assets, which will offer it intrinsic value, and, Facebook hopes, also price stability.3 The announcement gave a significant boost to the valuations of the other cryptos, which were already recovering from the 2017/18 crash. By June 26 Bitcoin, the market leader, surged above $13,000 registering an overall return of more than 250 per cent for the year.4 Other cryptocurrencies followed with market analysts seeing evidence of a...