Ben Bernanke: Bitcoin Technology Good, Currency Bad

Ben Bernanke expressed optimism over Bitcoin's potential as a payments technology but was pessimistic over its prospects as a currency.

Former Federal Reserve Chairman Ben Bernanke has weighed in on Bitcoin, expressing optimism over its potential as a payments technology but pessimistic over its prospects as a currency.

He made his comments to online business news publication Quartz, which interviewed him following the release of his recent book, The Courage to Act. In it, Bernanke shares his thoughts and feelings from when he was at the helm during the worst financial crisis since the Great Depression, as well as his outlook moving forward.

Asked “What do you think about bitcoin?”, he replied:

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“It’s interesting from a technological point of view. We’re in a world where the payments system is evolving quickly and new approaches to managing payments are proliferating, and some of the ideas around bitcoin will no doubt be useful in doing that.

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“But I think bitcoin itself has some serious problems. The first is that it hasn’t shown to be a stable source of value. Its price has been highly volatile and it hasn’t yet established itself as a widely accepted transactions medium.

“But the real serious problem that it has is its anonymity, which is a feature, and is also a bug, in that it has become in some cases a vehicle for illicit transactions, drug selling or terrorist financing or whatever. And you know, governments are not happy to let that activity happen, so I suspect that there will be oversight of transactions done in bitcoin or similar currencies and that will reduce the appeal.”

Bernanke’s views hardly come as a surprise. They are shared by many other senior figures in government and finance, who see Bitcoin and concepts inspired by it as potentially powerful tools to disrupt payments, but view the currency as worthless.

However, numerous government figures, venture capitalists and Bitcoin experts have argued that the technology and currency are tied together. Many are therefore bullish on the bitcoin price.

Proponents of this view may point out that Bitcoin’s supply is constrained. Bernanke’s policies, however, devalued the dollar through seemingly endless printing, they argue, though the dollar has been the strongest world currency in recent times.

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