It was not more than three years ago that the establishment icons of the world like the Wall Street Journal and the International Monetary Fund (IMF) were wholly ignoring Bitcoin and the world of digital currency. It is clear that these innovations and financial advancements like Bitcoin’s Blockchain technology cannot be ignored any more.
The Wall Street Journal held a twenty-minute Q&A with one of the world’s most powerful financial executives, Christine Lagarde, Managing Director of the IMF, to discuss many topics that affects the economic world we live in. Among the questions posed at the request of people who sent in questions to WSJ’s economics editor Sudeep Reddy, included how digital currencies like Bitcoin would affect the future of economic growth. Lagarde gave a positive response: “Ultimately, I think it will be in the interest of financial institutions to adopt those technologies (digital currencies) because, like any economic player in that field, they want to reach out to new markets. They want to not just keep their market base but expand it. And the way to expand it is to reach out to new territories”.
Then Lagarde added:
“I would be very surprised that if, in 5 years time, many of the existing financial institutions have not adopted those tools.”
This is in stark contrast to the thoroughly dismissive, if not an outright combative response of J.P. Morgan Chase Inc. CEO Jamie Dimon last year. He received a direct question about the usefulness of Bitcoin last year at a Fortune forum panel discussion in New York. At the time, he said:
“You’re wasting your time (with Bitcoin!) Virtual currency……that’s going to be stopped!”
On the surface, this makes sense, due to the fact that a banking executive may not see a way to profit from a decentralized currency, so it is of no value to him, in particular. Dimon was much more positive on the use of Bitcoin’s Blockchain technology.
Lagarde also commented on the scope and security of the digital currency world:
“Now, as far as cryptocurrencies, Blockchains…. How they’re going to disrupt, how they’re going to secure the confidentiality of transactions, how they’re going to form communities, I think we’re on the cusp of seeing significant developments.”
She added: “For the moment, the volume is not such that it is either systemic, or a threat, or totally secure, but what we are certain of is that the supervisors and regulators have to keep an eye on that because it can also be a channel for illegitimate transactions. We don’t want to see money laundering, financing of terrorism, using those tools.”
What is important to understand is the change in the narrative from year to year, and the thoughts of the most elite of economic executives. Like Dimon, she could have been dismissive of the impact of digital currencies, but instead was almost supportive of the concept and the integration into mainstream financial life in the near future. Two or three years ago, her answer might have been very different. This underscores how far Bitcoin and the related technologies have come, and the growing belief that their eventual future mainstream acceptance is assured.
“First they ignore you, then they laugh at you, then they fight you, then you win.”
- Mahatma Gandhi