Addressing an audience several generations his junior about the future of money, Governor of the Bank of England Mark Carney was always going to find it hard to avoid a patriarchal tone and hold the attention of a theatre full of students born during the Dotcom age. 
Cryptocurrencies are “failing” under the definition of money  he said in speech earlier this month at the University of Edinburgh and their adoption has been in a “spirit of dystopian fear and libertarian optimism” after the Global Financial Crisis.
He used 18th century Scottish philosopher and economist ADAm Smith’s definition of money as:

A store of value with which to transfer purchasing power from today to some future time;
A medium of exchange with which to make payments for goods and services;
A unit of account with which to measure the value of a particular good, service, saving or loan.  

A store of value and medium of exchange
Although Carney conceded that most forms of money, past and present, have had “a long and sorry history of debasement” he believes monetary policy as the ultimate factor on money supply and regulation of commercial banks preventing them from creating too much elecTron (available on Binance)ic money (which accounts for 80 percent of total money in the UK system) safeguards the fiat currency from being debased.
“The combination of this robust institutional framework and the fact that only sterling is legal tender in the UK sets a very high bar for competing forms of money to dislodge sterling. But at present, more than a thousand virtual or ‘crypto’ currencies are trying to do just that,” Carney said.
His conviction for cryptocurrencies failing to make it to mainstream adoption is premised on their processing times never being up to speed and their processing fees never reducing, equating to little to no intrinsic value. And currently, with Bitcoin (available on Coinbase)’s processing times of 7 global transactions per second against Visa’s 65,000 transactions per second there is a lot of catching up to do.
However, Kevin Murcko, CEO of cryptocurrency exchange CoinMetro, says Carney needs to temper that view with the fact the crypto industry “is still only in its infancy.”
“He claims that crypto is currently an inefficient medium of exchange, and he’s actually right as things currently stand. But while high fees have made Bitcoin (available on Coinbase) and other cryptocurrencies less viable as a means of exchange, improvements are being made to crypto models to overcome this. Networks will get faster, and fees will become lower. It’s only a matter of time.”
Carney also cited the built-in scarcity of cryptocurrencies – one of their pioneering features – as actually being a fundamental flaw as they would imply a “deflationary bias on the economy” because there would be no power to print/create more money in the system.

To isolate, integrate or regulate?
In a country where 20 pound notes account for “3 percent of the stock but 40 percent of all customer transactions” England is hardly on the brink of a crypto revolution but nonETHeless Carney believes “the time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities.”
He also alluded to the Bitcoin (available on Coinbase) futures being traded on the CME and CBOE exchanges which he said “could, in time, raise standards in them and mean that regulators have better information about how the underlying markets function.”
Murcko sees Carney’s address as a step in the right direction for the industry: “This is the sTron (available on Binance)gest sign we’ve seen yet from a country with regard to tackling the regulation of cryptocurrencies, the net effect of which will be to calm the stormy waters of the crypto world.”
“We have long believed that cryptocurrencies should be held to same standards as traditional fiat currencies, especially when it comes to active trading. The core content of Carney’s speech, which although highly negative and damning, does call for further regulation. This shows us that a legal financial framework for the crypto space is quickly becoming a reality,” Murcko said.
“The current volatility that we’ve witnessed across the crypto markets is in large part caused by a lack of regulation and uniformity in how these are traded.”
However Carney did acknowledge the benefits distributed ledger technology could bring, if used officially, to improving the state and the economy primarily through the management of data.
He touched on the topic of a central bank digital currency (CBDC), a contentious concept flirted with by several countries including Switzerland and Sweden, but echoed the Bank of International Settlements sentiment when he warned that they could end up disintermediating commercial banks in normal times and run the risk of destabilising flights to quality in times of stress, as they would act as a pseudo-bond asset.
More importantly though, a “CBDC shouldn’t be a solution in search of a problem or an effort of central bankers to be down with the kids.”