Bank of England Governor Mark Carney sees fundamental problems with the concept of Bitcoin as a viable currency when measured by standard benchmarks.
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.”
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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 made by conducting them in a decentralised manner, which could conceivably eliminate 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 has said in the past that Bitcoin actually behaves more like an equity or a speculative asset, and the underlying cryptocurrencies of blockchain technology are an “active area of interest.” Even so, the central bank is in no rush to embrace the new technology.