While the price of the world’s top cryptocurrency, bitcoin, has been seeing ups and downs lately, some global central bankers have started voicing their doubts about the utility and inherent volatility of crypto assets.
The governor of Sweden’s central bank, Stefan Ingves, said during a recent banking conference in Stockholm that bitcoin’s value could collapse drastically. He compared the digital currency to stamp-collecting, casting doubt on its validity and long-term feasibility. “Private money usually collapses sooner or later,” he said, adding, “And, sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps.”
Ingves said that regulatory scrutiny of cryptocurrencies would likely increase as the popularity of the digital assets grows.
Meanwhile, Bank of Mexico Governor Alejandro DÃaz de León said on Thursday that, in his view, bitcoin was a tool for barter rather than viable as legal tender. He described it as a poor store of value, citing its wild price swings. “Whoever receives bitcoin in exchange for a good or service, we believe that is more akin to bartering because that person is exchanging a good for a good, but not really money for a good,” he was quoted as saying by Reuters.
“People will not want their purchasing power, their salary to go up or down 10% from one day to another. You don’t want that volatility for purchasing power. In that sense, it is not a good safeguard of value,” de León said. He affirmed that Mexico wouldn’t be seeking to adopt crypto as its currency, like El Salvador has, given what he described as its flaws.
According to the Bank of England’s fintech director Tom Mutton, the technology behind central bank digital currencies could actually be “tens of thousands of times more efficient per transaction” than bitcoin’s. Mutton said in June: “Given its performance shortcomings and energy inefficiency, [it] is in no way a relevant comparison for the sort of technology we might use in a central bank digital currency.”
Bitcoin is up over 9% from a weekly low of $42,900, and up over 61% in year-to-date terms. The crypto is currently changing hands for around $46,840, after reaching a 24-hour high of $47,396, CoinDesk data shows.
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