Financial market expert: Blockchain could eliminate cash

Rage Commentary : At the Cayman Alternative Investment Summit, the founder of London-based DPRM Group said that blockchain may make cash disappear, but it will not make the government lose its understanding of the economy. Using blockchain to digitize legal tender to replace cash will be beneficial to the speed, cost and efficiency of fund transfers, benefiting the poor. Although political resistance to the realization of digital legal tender is inevitable, India's demonetization has shown us the huge potential for the popularization of digital currency.

Translation: Annie_Xu

Philippa Malmgren, founder of the London-based DPRM Group, which helps companies, investors and policymakers better understand risk and price changes across the economy, told the recent Cayman Alternative Investment Summit that blockchain could spell the end of cash.

Yahoo Finance’s Jared Blikre conducted a video interview with Malmgren during the summit, titled “Defying Gravity: The Future of Alternative Investments in Exceptional Times.”

According to Wikipedia, Malmgren served as Special Assistant to the President for Economic Policy at the National Economic Council and was a former member of the President's Working Group on Financial Markets.

Blockchain is the future

Philippa Malmgren

“Blockchain is the future, it means every time you do any kind of electronic transaction, you buy something online, you use your credit card in a store, it is automatically recorded in the cloud,” she said.

“There’s no need to keep some ledger and have your accountant look at it anymore; it’s all automated and it shows where you were when the transaction happened.”

“It’s a big deal, it’s almost a whole new accounting system, it’s a new measurement system that tracks everything.”

“Economic events are 100 percent transparent; people think if they start using Bitcoin or electronic currency they will have privacy; but in reality, blockchain means the government can see everything,” she said.

How cash will disappear

Blikre pointed out that cash is still here, just outside the government’s purview. “It won’t last long, people haven’t noticed the speed of adoption of electronic money. It took the Indian government 53 days to get a billion people using digital money.

According to a report by Bloomberg News last year, a dedicated digital currency system would make it easier, faster and cheaper to transfer money between businesses and people, and between commerce and commerce. Increased efficiency and cost savings would benefit the poor, especially as banks would face fewer barriers to performing costly tasks.

The Bloomberg report states that one of the biggest challenges is convincing people that cash is not worth holding. This movement towards a legal digital currency to replace cash will certainly face political obstacles. However, telling the masses about the benefits of implementing a digital currency will be a major friction point that the government can avoid.

Malmgren is generally bullish on financial markets. She believes that the market has responded well to the government's commitment to reduce regulation; the stock market is expected to reach higher heights.

Malmgren said Federal Reserve Chair Janet Yellen believes inflation will continue to rise over the next few years.