Why government backed currencies are not a threat

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Tezos co-founder Kathleen Breitman isn’t worried about what CBDCs would do to cryptocurrencies. She told Insider that the need for a currency without a government will persist. Breitman also shared his top tips for getting started in crypto investing.

If anyone has a good idea of ​​what a central bank digital currency (CBDC) would look like, it’s Kathleen Breitman.

In 2020, the European Central Bank conducted an experiment for a digital euro using the Tezos blockchain (XTZ), a cryptocurrency that Breitman co-founded and helped design with her husband Arthur Breitman. The central bank of France, Banque de France, is also conducting a CBDC experiment alongside French bank Societe Generale using the Tezos blockchain.

As cryptocurrencies become more popular, central banks around the world, including the US Federal Reserve, are considering creating digital versions of their fiat currencies. China has done it before, and Bank of America recently said it was “inevitable” that central bank digital currencies would be adopted.

The creation of CBDC would allow governments to retain more control over things like identity and monetary policy, which they risk losing as crypto adoption becomes mainstream, while still providing people with the benefits. that blockchain technology enables, such as faster payments.

This has worried many in the crypto space who are concerned that a CBDC will make other cryptocurrencies obsolete and unnecessary. If a government-backed and therefore somewhat more secure digital currency provides the same services as other cryptocurrencies, then it is believed that there will be no use for other cryptocurrencies.

Kathleen Breitman does not share this point of view, however. In an interview with Insider earlier in July, she pushed back against the idea that a CBDC would spell the end of other cryptocurrencies. This is because people’s desire for a currency beyond government control will not dissipate, she said.

“Basically, they’re meant to solve two different problems,” Breitman said. “Bitcoin is presented very extensively in its white paper as an alternative to payment rails that are organized and controlled by central parties. So this is fundamentally a completely different use case.”

She continued, “I don’t think it crowds out the need for something that is not controlled by a government. On the contrary, it highlights it, because it all of a sudden makes it very difficult to disentangle yourself from it. your government departments. “

Of course, it remains to be seen what kind of regulation, if any, for cryptocurrencies comes from governments. Marco Pirondini, the chief U.S. strategist and portfolio manager at Amundi, said in an interview in June with Insider that he believes tough regulation in the space is coming.

“I don’t see any state willing to lose control of its own currency in favor of these other currencies,” Pirondini said. “Can you imagine that the United States does not control monetary policy? Do you really believe that the United States will agree not to control its monetary policy?

How to start investing in crypto

With the massive price swings in the crypto space over the past few years that have created obscene amounts of wealth, it can be tempting for investors to stack money in individual coins.

But Breitman is urging investors looking to get into crypto to take a safer route. One way to do this is to invest in a crypto index fund. Examples of such a fund would be the Bitwise 10 Crypto Index Fund (BITW) or the Invictus Crypto 20 Index Fund (C20).

She recognized that investing in crypto can often have less rhyme or reason than other asset classes. It should therefore not be used as an active management investment strategy, she said.

“I think this stuff is extremely esoteric, it’s momentum driven, it defies a lot of logic, and the fastest way to get gray hair is to think of it as a strategy to make alpha. “said Breitman.

“So I think treating it as the very cool but radical experience that it is is the best way to have fun with it, and if the products that you find interesting work well and gain relevance, even better.” , she added. .

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