Noteworthy's bold idea creates more questions than answers.
Bitcoin has cemented its reputation as being the next frontier in digital money — moving beyond the old-fashioned coins and banknotes that fiat currencies offer.
But one new project is attempting to create the best of both worlds… by creating banknotes that are backed by Bitcoin.
Noteworthy says that its banknotes are going to have a look and feel that’s not dissimilar to dollars, pounds and euros — with digital security embedded into each one.
The startup’s CEO, Larry Felix, formerly served as a director at the Treasury Department’s Bureau of Engraving and Printing. Explaining the rationale behind the product, he said:
“A physical banknote provides a level of trust, familiarity, and accessibility that digital assets on their own have yet to achieve.”
Is This a Smart Move?
The concept does create some burning questions. How would the banknotes cope with the continually fluctuating nature of Bitcoin’s price? How would a consumer get change from a banknote? And does this not detract from concerted efforts to get merchants to accept crypto through digitally focused platforms such as PayPal and Square?
One advantage that Bitcoin has over fiat currencies also concerns how the cryptocurrency is difficult to counterfeit. By contrast, fake banknotes have been an ongoing problem that central banks have struggled to contend with for decades.
Research from the Bank of England suggests that about 1 in 5,000 banknotes is fake — with 80,000 counterfeit £20 notes retrieved in the first half of 2020. The total value of bogus notes in circulation stood at £2.1 million over this period.
That’s a marked decrease from £9.9 million seen in 2019. Two factors may have contributed to the decline: the coronavirus pandemic, and the fact that a new range of more secure banknotes recently replaced their paper predecessors.