Cryptocurrency Concept Is a 'Fallacy' Says Finnish Central Bank Advisor

Using digital currencies synonymously with the term cryptocurrencies, a paper published by the Bank of Finland and written by one of its advisors argues that cryptocurrencies aren't real forms of money.

According to Aleksi Grym, the central bank's digitalization advisor, cryptocurrencies are "Not currencies at all but rather accounting systems for non-existent assets."

The "Great illusion," he posits, results from how "Poorly understood the concept of money still is" and the rather "Confusing choice of terminology" featured in the original white paper authored by bitcoin's pseudonymous creator, Satoshi Nakamoto.

Zeroing in on the true functions of bitcoin, Grym draws parallels between how bitcoin works and how a traditional bank functions.

First, with bitcoin, the accountants in a traditional bank are akin to the miners.

Second, the centralized ledger held by banks to record account balances and transactions are akin to the bitcoin blockchain.

"The only difference between a cryptocurrency system and a traditional ledger system is that in a cryptocurrency system the ledger is distributed across a network of computers, while a traditional bank maintains the ledger in a centralised computer system. There is no practical difference in what the systems do."

Whether the Bank of Finland agrees with Grym is perhaps beside the point; back in 2014, the central bank classified bitcoin as a kind of commodity rather than a currency.

The subject remains one of interest for the institution, having published multiple research papers that explore the multifaceted issues surrounding cryptocurrencies and blockchain.

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