Cryptocurrency will destroy banks soon – Economist

The evolution of blockchain-based digital currencies will soon result in the death of traditional banks as we know them, according to Efficient Group chief economist Dawie Roodt.

Speaking at the Chain Reaction cryptocurrency event in Johannesburg, Roodt said that the world economy is evolving towards a frictionless, decentralised model with greater individual freedom and less interference from centralised banks and governments.

“I think we are at the beginning of a dramatic change in the financial system,” Roodt said. “I think the way we understand payment systems and banks is likely to change completely.”

“We are going to see the end of banks – at least the way we understand banks – soon.”

He added that once there are no more banks, there will be no more central banks, and that will make it far more difficult for transactions between people to be taxed.

How taxes will change

“It is much more difficult to tax somebody if you can’t see what’s going on,” Roodt said, referring to the anonymous and decentralised nature of cryptocurrencies.

He said this lack of direct control over money will make it far more difficult for politicians to tax personal and business transactions in future.

This will result in governments becoming less powerful and seeking different ways to tax citizens due to the difficulty in taxing financial transactions.

“If [politicians] can’t tax financial transactions, that leaves you with few options: one is a toll tax on heads, and another is a tax on properties.”

This means that governments will lose a large amount of their control over money, and they will have to rely on land and transport-related taxes to earn money from citizens.

Roodt also argued that decreased financial transaction taxes such as VAT and income tax would encourage more trading and payments, which in turn will create more wealth and place more power in the hand of active participants in the economy.

“This will create even more wealth and lead to a huge realignment of political powers in the economy and more individual freedom,” he said.

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Cryptocurrency will destroy banks soon – Economist