A global cryptocurrency is coming, but it is not bitcoin, says former Trump advisor

'I’m not a big believer in bitcoin, I am a believer in blockchain technology'

Anthony Cuthbertson
Wednesday 09 May 2018 12:56
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What is Bitcoin and why is its price so high?

There is a pressing need for a global cryptocurrency – but it will not be bitcoin, according to a former advisor to Donald Trump.

Technological complications means that bitcoin is limited, but the technology powering it could become incredibly important, said Gary Cohn.

The former chief economic advisor, who resigned from the Trump administration in early March, said in an interview on this week that bitcoin’s underlying blockchain technology was more interesting than the actual virtual currency.

As the world’s first cryptocurrency, bitcoin was the first to make use of the blockchain – an online ledger that serves as a permanent record of all transactions for the digital currency. As bitcoin adoption grows, several flaws have become apparent with its technology, such as the time it takes for transactions to be recorded and the costs involved.

The energy required to generate, or ‘mine’, new units of bitcoin is also incredibly intensive and requires specialist computer hardware. More than 1,500 cryptocurrencies have been developed since bitcoin’s inception in 2009, each attempting to overcome these issues through new iterations of the blockchain.

“I’m not a big believer in bitcoin, I am a believer in blockchain technology,” Mr Cohn told CNBC. “I do think we will have a global cryptocurrency at some point where the world understands it and it’s not based on mining costs or costs of electricity or things like that.”

The comments of Mr Chon, who has also previously held the role of president of the investment bank Goldman Sachs, come at a time of continued volatility for bitcoin - another reason that analysts give for it being unsuitable for use as a global currency.

His former employer is the first major Wall Street bank to open a bitcoin trading desk, having succumbed to pressure from clients enthusiastic about cryptocurrency.

Bitcoin was the first cryptocurrency, however critics say it is not the best.

The operation, which is set to go live in the coming weeks, will be led by the bank’s first ever digital assets trader, Justin Schmidt.

“This shouldn’t come as a huge surprise to anyone who has been paying attention to cryptocurrencies over the last 18 months," Matthew Newton, an analyst at cryptocurrency retailer eToro, told The Independent when the news broke last week.

"Any forward-looking financial institution needs to understand this technology and accept its enormous potential."

Looking beyond bitcoin, Mr Cohn said a system is needed that is able to meet the challenges required for a global cryptocurrency.

“It will be a more easily understood cryptocurrency,” he said. “It will probably have some blockchain technology behind it, but it will be much more easily understood how it’s created, how it moves, and how people can use it.”

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