BoE's Governor Carney Says Bitcoin Fails as a Substitute CurrencyFebruary 20, 2018
Bank of England Governor Mark Carney sees fundamental problems with the concept of Bitcoin as a viable currency when measured by standard benchmarks.
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Responding to questions from students at London’s Regent’s University on Monday, the BOE governor said that there are two big problems with bitcoin as a credible currency: its value is unstable, and it can’t be a “useful way to buy things.”
The most important feature of a currency is to be a stable store of value. Yet, the wild swings in the value of digital coins do not make it a more plausible substitute currency, he added.
“It has pretty much failed thus far on … the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange,” Carney said.
Carney repeated the BoE’s view that the blockchain technology that underpins bitcoin and other virtual coins could improve the way transactions are conducted in a decentralised way, which conceivably eliminates the hassle of exchanging currencies and clearing the money through banks. But he highlighted, in response to a question, the risks of rolling out such an approach across the entire economy through a cryptocurrency intended for the public.
Carney said before that bitcoin actually behaves more like an equity or a speculative asset, though the systems underlying cryptocurrencies are an “active area of interest.” Even so, the central bank is in no rush to embrace the new technology.
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