UBS Group AG Chairman Axel Weber, the former president of Germany’s Bundesbank, has played down the potential of cryptocurrencies such as Bitcoin, joining several senior bankers who recently announced that they are not fans of the digital asset class.
But although Weber believes that Bitcoin’s prospects as a currency are bleak, he said that blockchain technology holds promise.
His comments were made during a conference organized by the Swiss Finance Institute. He said that Bitcoin’s shortcomings as a currency stems from issues like its inability to play traditional roles such a means of payment, a generally accepted asset and a store of value. Weber also approached it from a different angle, essentially saying that Bitcoin is only a transaction currency.
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“I get often asked why I‘m so skeptical about bitcoin, it probably comes from my background as a central banker. The important function of a currency is, it’s a means of payment, it has to be generally accepted, it has to be a store of value and it’s a transaction currency. Bitcoin is only a transaction currency,” Weber said.
The former policymaker at the European Central Bank (ECB) is the latest major banking figure to express such a view on Bitcoin in less than a month. JPMorgan CEO Jamie Dimon recently commented that Bitcoin’s prospects for survival are poor, saying that it is a fraud and will blow up eventually, adding that he would fire any employee trading in Bitcoin for being “stupid”.
Many other senior bankers have recently launched a scathing attack on Bitcoin for different reasons including the absence of government backing, low interest from the broader public and high volatility.
Nonetheless, Weber had warm words for the blockchain, saying that its potential is significant, echoing previous comments he has made on the matter. UBS has been one of the most visibly active players in the space and said over time the idea of a digital ledger would be widely accepted.