State involvement in cryptocurrencies. A potential world money?

Abstract

This article is about the role that states play in the research and development of cryptocurrencies and their underlying technology. Some states, for instance China, are about to launch their own state-backed cryptocurrency perhaps due to the potential of this new type of digital money to become world money. To support this argument, Marxist monetary theory is deployed to show that cryptocurrencies could be conceived as potential digital commodity money, a new and incorporeal type of commodity money with intrinsic value but without use value. Lacking a natural form, it could potentially have only a “formal” use value: direct exchangeability with all other commodities. If states manage to actualise this potential by issuing their own cryptocurrencies and making them legal tender money, cryptocurrencies could function as international means of payments and means of hoarding perhaps more efficiently than credit money. In the case of China, this means that this new digital money would have a chance of competing with the US dollar as international reserve currency.