Bitcoin and Libra to be the potential game changers in the financial systems: Former IMF Chief Economist

The future will be of digital currency and there is no doubt about that. Bitcoin is already popular while Libra will soon become once its properly launched. Former IMF Chief Economist Raghuram Rajan considers that Bitcoin and Libra will prove to be the game changers in the financial sector once central banks become involved.

Libra is a permissioned blockchain digital currency proposed by the American social media company Facebook, Inc. The currency and network do not yet exist, and only rudimentary experimental code has been released but its hype has never been less. In an interview with Beyond the Valley with Arjun Kharpal, Rajan comments that Bitcoin and Libra both are crucial to the financial systems as both have different functions.

He says that once the central banks hop onto the bandwagon of digital currencies, there is no going back. Both Libra and Facebook are equally important as Bitcoin will be used for storing assets while Libra will act as a tool for transactions.

Bitcoin over Gold

The former governor of the Reserve Bank of India prefers Bitcoin over gold but also thinks that Bitcoin’s value is based on our supposition. He comments that gold has a solid value because we value it for jewelry but even though Bitcoin is like gold, its value is still based on other people’s assumption.

Meanwhile, Rajan also believes that Libra may serve a bigger role in the eyes of central banks as its main role is transacting rather than storing. It would not increase in value as it is not an asset but its main value would be derived from the central banks as they are going to be in charge of its value. Central banks would have full control over what Libra can be exchanged into.