If you’ve read a government or central bank report or policy paper in the last few years, you might have found a fascinating difference these entities make when it comes to money. They tend to refer to national fiat currencies as ‘public currency,’ whereas bitcoins and other digital currencies are pointed to as ‘private money,’ meaning that one ‘belongs’ to the public whereas the other is exclusively the property of private entities. For a variety of purposes, this distinction is confusing, if not downright false.
Yes, Fiat banking systems are ‘public’ in the sense that they are produced and operated by agencies that are (considerably) accountable to the people, and yeah, of course, cryptocurrencies are ‘confidential’ in the sense that they exist entirely independently of government control. Many people in the cryptocurrency industry, on the other hand, believe that the general public has a greater impact on the production of cryptocurrencies than they do on the development of fiat currencies.
What exactly is ‘public’ money?
It’s not difficult to find cases of central banks using the words “public currency” and “private money” derogatively. In the speech by Christina Segal-Knowles from the Bank of England in June, there are references to both the money distributed by a central bank as ‘public’ and almost everything else (which includes money distributed by commercial banks) as ‘private.’
Similarly, the International Monetary Fund did the exact comparison in a February blog post, in which it also described public funds as “absolutely safe.”
Any supporters of the public-private money division claim to also have a fairly positive understanding of what public money is.
In a speech delivered in November 2020, Fabio Panetta of the European Central Bank provided the following concept of public money:
“a public good that central banks have managed in the public interest for decades and that should be open to all people to fulfill their need for safety.”
No central authority in the community.
The crypto community, on the other hand, appears to be Strongly Resistive to such a view of public finance, particularly when it is argued that fiat currencies are operated “in the public interest” and are meant to “be open to all people.”
Such an assumption, they believe, is completely in conflict with the truth of how capital (in whatever form) is handled and circulated.
Peter McCormack, the host of what Bitcoin Did podcast said,
Public is perhaps the wrong adjective for describing money, even if this description is used by a central bank. He further added: ‘No public money should be subjected to Citizens, all the money created by the productive output of an individual should be private, and property rights should be respected.
Similarly, some disagree with Bitcoin’s (BTC) and other cryptocurrencies that could be out of public reach, while fiat currencies are somehow regulated.
“Governments make decisions on fiat currency control, and the public has little influence over this matter. On the other hand, Cryptocurrency( private money) is controlled by the public community, granting the ‘public’ control,” said Lou Kerner, CEO of BIGtoken.