What’s Going On?
Bitcoin is safe from 51 percent attacks and cryptocurrencies could bring huge welfare gains to North America, says Canada’s central bank.
Why Does It Matter?
In a working paper published this week, the Bank of Canada’s (BoC) Mohammad Davoodalhosseini said a central bank digital currency (referred to as CBDC in the paper) could “lead to an increase of up to 0.64 percent in consumption for Canada and up to 1.6 percent for the US, compared with their respective economies if only cash is used,” reported CoinDesk.
“I put together a model in which cash and CBDC co-exist, and agents with heterogeneous transaction needs can choose their portfolios with varying mixtures of each,” wrote Davoodalhosseini in the paper. “Removing cash from circulation may be a welfare-enhancing policy if the motivation to introduce CBDC is to improve monetary policy effectiveness.”
So Canada Likes Crypto?
Canadian bankers are certainly giving blockchain and bitcoin plenty of attention – a separate working paper published by the central bank this month appears to conclude Bitcoin is protected against a 51 percent attack, often described as crypto’s gravest threat, reported CoinDais. The paper’s authors, Jonathan Chiu and Thorsten Koeppl, arrive at this conclusion through analysis of the proof of work model.