Pros and Cons Of A Country Doing "Bitcoinization"

[bryant.coleman]

If some country decides to replace its own local currency with Bitcoins, then I assume that there will be more cons than pros. The Forex trade will be disrupted, as the banks will not recognize a currency which is not centralized. Also, Bitcoin usage needs some knowledge of computers or smartphones. If there are people who are ignorant in this, what they will do?

[South Park]

I ran across this article http://www.investopedia.com/articles/04/082504.asp about the idea that a country abandon the local currency in favor of the exclusive use of the U.S. dollar (or another major international currency, such as the euro). They call it "dollarization" so why don't we add "bitcoinization" to the discussion?

It also talks about the idea of "pegging" their local currency to a major international currency (this differs from dollarization as it is non-exclusive use).

So, what if countries start using Bitcoin in either of these ways? There are many (hundreds) of countries, some too small to really develop "counterfeit" proof fiat paper currencies. And with the proliferation of cell phones, digital money is just more efficient so they would be able to leap frog over the whole fiat fiasco by going right to digital.

So what might countries experience if they did allow Bitcoin an equal playing field to compete with other currencies that their populations are already using? Especially the type/size country the article is talking about (smaller ones).


Read more: Dollarization Explained | Investopedia http://www.investopedia.com/articles/04/082504.asp#ixzz4YzsnBALH
Follow us: Investopedia on Facebook

If that ever happened, then it will need to be in a small country with a low amount of population that has high standards of life, and that is because to use bitcoin you need electricity, internet access and a computer or smart phone, so you could not do that in third world country because many people don't have access to any of those 3 things.

[Victorycoin]

I ran across this article http://www.investopedia.com/articles/04/082504.asp about the idea that a country abandon the local currency in favor of the exclusive use of the U.S. dollar (or another major international currency, such as the euro). They call it "dollarization" so why don't we add "bitcoinization" to the discussion?

It also talks about the idea of "pegging" their local currency to a major international currency (this differs from dollarization as it is non-exclusive use).

So, what if countries start using Bitcoin in either of these ways? There are many (hundreds) of countries, some too small to really develop "counterfeit" proof fiat paper currencies. And with the proliferation of cell phones, digital money is just more efficient so they would be able to leap frog over the whole fiat fiasco by going right to digital.

So what might countries experience if they did allow Bitcoin an equal playing field to compete with other currencies that their populations are already using? Especially the type/size country the article is talking about (smaller ones).


Read more: Dollarization Explained | Investopedia http://www.investopedia.com/articles/04/082504.asp#ixzz4YzsnBALH
Follow us: Investopedia on Facebook

If that ever happened, then it will need to be in a small country with a low amount of population that has high standards of life, and that is because to use bitcoin you need electricity, internet access and a computer or smart phone, so you could not do that in third world country because many people don't have access to any of those 3 things.

I still seethe possibility for Bitconization even with a small but developed country running into mucky water because it takes been in near absolute control of the economy to be able to manage a developed country. Leakages in tax collection, inaccurate balance of trade data and above all, the country would be open to all-what-not influences that happens anywhere in the globe. That leaves us with the picture that the cons for bitcoinization seems to outweigh the pros, even for a small and developed country, so it would be quite unlikely that it would become the order of the day in anyone country.