Starbucks wants to play a role but isnt making a big investment in a cryptocurrency future right now, Schultz said.

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The Bank for International Settlements, the central banker for global central banks, has warned that cryptocurrencies in the future could become a threat to financial stability if regulators arent vigilant. U.S. regulators appear to be playing catch-up. As of Feb. 6, the cryptocurrency working group put together by Treasury Secretary Steven Mnuchin had held a single meeting.

If a cryptocurrency acted as a reliable, widely accepted store of value, people could cut ties to their banks. They could keep some crypto cash in digital wallets, with other liquid assets in mutual funds, stocks and government bonds.

The Fed seems on track to suffer the same fate as the Bank of Japan. The BoJ has been forced to accommodate sky-high government deficits with easy money and asset purchases. Japan, with a falling working-age population, hasnt had a whiff of inflation. But the U.S. might be a different story.

Politicians and central bankers worry that cryptocurrencies wont hold value in a panic. When things really go bad, where do Americans turn?Philadelphia Federal Reserve President Patrick Harkerasked a fintech conference last fall. Well, theyre going to come back to the government. Thats the history of the country.

Dimon is surely right about one thing: The cryptocurrency future will depend heavily on government. That could mean smothering it with regulation, stealing its thunder via FedCoin or cultivating it with a light regulatory touch.

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Weve seen thedesire from our customers to accept Bitcoin decrease, explained Stripe product manager Tom Karlo.

Doubts fueled by ballooning balance sheets of the major central banks in the aftermath of the global financial crisis motivated early cryptocurrency investors, JPMorgan analysts wrote. Yet the lack of any upsurge in inflation since has surely reduced concerns about fiat (legal tender issued by a central bank) money.

The continued growth of public debt raises eventual sustainability questions if left unchecked, Goldman Sachs economists warned recently.

Retail giants, by accepting payments in the currency, could elevate Bitcoin, Ethereum or another cryptocurrency above the others vying to offer safety, soundness and utility.

Warner criticized the CFTC for embracing Bitcoin options at this stage. He fretted that total cryptocurrency market capitalization could hit $20 trillion vs. $300 billion now with another 2017-like surge.

Finally, if  trust is lost in government-backed, or fiat, currencies, a cryptocurrency future could come about by default. That may be a risk not only in places like Venezuela, but in the U.S., where federal deficits are spiraling.

That explosive potential helps explain why so many tech entrepreneurs and investors turned cryptocurrencies into a 21st Century gold rush, even asJPMorgan Chase(JPM) CEOJamie Dimon has trashed Bitcoin as a fraud.

Yet the Fed now faces a much different challenge: a runaway federal deficit even amid a strong U.S. economy. The deficit will top $1 trillion in fiscal 2019 and $2 trillion by 2027, and theres no fix in sight. Republicans have overseen big deficit-financed tax cuts and increased government spending. Democrats want more generous Social Security benefits, Medicare for all and debt-free college.

Cryptocurrency investors have speculated that Amazon might accept Bitcoin or one of its digital rivals. That specific cryptocurrency would vault past competitors as a trusted store of value and useful medium of exchange. Amazon even registered the domains , m and AmazonCryptocurrencies, kicking such talk into high gear.

Bitcoin had doubled in the first half of December,hitting a peak above $19,000 just as Bitcoin futures began tradingonCboe Global Markets(CBOE) andCME(CME). The anticipation of futures trading, touted as validation from U.S. regulators, stoked speculation.

The Fed controls the creation of money, but central bankers seem to be losing their grip. Any loss of faith in the dollar and the Fed bodes well for a cryptocurrency future as dollar-skeptics look for an alternative store of wealth  besides gold.

Alternatively, Amazon, Walmart or a consortium of large companies might issue their own cryptocurrency. Doing so could let them save on transaction costs and act as a competitive weapon.

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A Bank of England study concluded that acentral-bank cryptocurrency could boost GDP by 3%. Gains would come, in part, from shrinking monetary transaction costs that are analogous to distortionary tax rates.

The Federal Reserve could issue its own digital currency, as some global central banks are exploring.

Bitcoin fulfilled famed economist Friedrich Hayeks idea of denationalizing money. He believed competition could help keep central banks honest and prevent runaway inflation.

Large companies such as Amazon, Walmart and Starbucks might issue digital coins that inspire trust and gain wide acceptance.

Yet imagine if Amazon or Walmart rewarded loyal customers with tokens that could escalate in value. The tokens would jump to the head of the cryptocurrency pack with potential for broad acceptance as a currency. Customers would likely hoard the tokens, rather than spend them. The effect on sales and profits might be electric.

Bitcoin and other digital rivals are nowhere near ready for prime time. They might never match the utility of todays financial-system incumbents, the banks and payment companies that facilitate the flow of funds over tens of millions of merchant locations.

But Amazon has also been cozying up with JPMorgan. Recently,Amazon and JPMorgan have partneredin a health care venture and increating a new type of bank account.

Those milestones could ease fears of a massive cryptocurrency crash. The Fed shouldnt need to rush in and save the day if AmazonCoin or WalmartCoin crashed.

Yet theres reason to doubt that cryptocurrency frenzy will return. JPMorgan Chase,Bank of America(BAC) andCitigroup(C) Ma Bell in Warners analogy banned credit-card purchases of cryptocurrencies. Meanwhile, the SEC and foreign governments have cracked down on initial coin offerings. And lately,Alphabet(GOOGL)-unit Google,Facebook(FB) andTwitter(TWTR) have banned cryptocurrency ads.

The fiat currency system may be seriously tested over the coming decade and ultimately we may need to find an alternative, Reid wrote. Cryptocurrencies are all the rage at the moment and are as much about blockchain as anything else, but there could be an increasing desire for alternative mediums of exchange in the years to come.

Bitcoins peer-to-peer electronic payment system, first proposed in 2008 to verify transactions through a decentralized public blockchain, arrived on the scene as the global financial crisis triggered bailouts of one big bank after another.

Deutsche Bank global credit strategist Jim Reid put this shocking headline on a November report: The Start of the End of Fiat Money? Reid argued high debt levels will keep the Fed and other central banks too accommodative, putting fiat currencies at risk.

Harker did allow that other currency models might work if another large player besides the government provided trust.

I personally believe that there is going to beone or a few legitimate, trusted digital currenciesoff of the blockchain technology, Schultz said. He doubted that Bitcoin would be one of them.

The surge in value of Bitcoin and its digital currency rivals has not been matched by their everyday utility. Payment processor Stripe cut off Bitcoin support in January, citing slow transaction times and high fees.

Cryptocurrencies will have to be legitimized by a brand in a brick-and-mortar environment, where the consumer has trust and confidence in the company that is providing the transaction.

Dimon and other titans of finance voice certainty that commercial banks will remain indispensable, cryptocurrencies will stay on the fringe, and governments will want to keep it that way.

For a digital currency to gain wide acceptance from outside businesses, the issuer would have to act like a central bank. Governing a currency requires trust, so some functions might need independence from corporate issuers.

Keep in mind that fiat money is a relatively young innovation. Its only truly been the norm since President Nixon ended the dollars quasi-gold standard in 1971.

Yet much like millennials will never have a landline, a coming generation might do without bank accounts thanks to secure, peer-to-peer cryptocurrency transactions. Blockchain technology and the vast new crypto wealth have opened the door to four cryptocurrency futures that could usher in a new financial order.

Yet FedCoin looks far-fetched at present because of the massive disruption it could cause. Central bank crypto dollars could endanger the economically and socially important financial intermediation function of commercial banks, JPMorgan analysts warned.

Virtual currencies might just give existing currencies and monetary policy a run for their money, International Monetary Fund director Christine Lagarde predicted last fall. Citizens may one day prefer virtual currencies, since they potentially offer the same cost and convenience as cash no settlement risks, no clearing delays, no central registration, no intermediary to check accounts and identities, she said.

Blockchains potential to revolutionize the financial system has some central banks studying whether to issue their own digital currency.Yale University scholars have proposed the FedCoin. In this cryptocurrency future, FedCoin could make monetary policy more flexible and forceful, even allowing for negative interest rates.

The contribution of fractional reserve banking to global growth turning each $1 of deposits into $10 in loans  could fade. We would expect that central banks would think twice before disturbing this source of capital to the private sector.

Imagine being told one day that your paychecks would be in Bitcoin. Pretty cool, right? Except your liquid assets could tumble in value at any moment in this cryptocurrency future. And youd have to convert your cryptocurrency to dollars to buy groceries atWalmart(WMT), coffee atStarbucks(SBUX) or books onAmazon(AMZN).

Bitcoin hit its 2018 low early on Feb. 6,the morning of a key Senate cryptocurrency hearing, briefly undercutting $6,000. The chairmen of the Securities and Exchange Commission and Commodity Futures Trading Commission both urged stronger oversight. But the financial regulators stopped short of sounding an alarm. Nor did they call for any legislation to rein in cryptocurrencies. In the weeks after that hearing, Bitcoin rebounded to around $11,000 but it has retreated yet again to below $7,000.

Currencies rely on conservative and predictable rules to assure the public that massive money printing wont destroy value. Could people trust the central bank of Amazon?

At the Senate hearing, Sen. Mark Warner, D-Va., who earned his fortune as an early investor in the cell phone industry, said he sees a parallel between mobile phones then and cryptocurrencies now. The same kind of transformation is about to take place, he said.

Even Ethereum founder Vitalik Buterin warned via Twitter not long ago that cryptocurrenciescould drop to near-zeroat any time. He added that traditional assets are still your safest bet.