The attraction of Bitcoin and other cryptocurrencies is that they are “successful as a speculative asset.” This was stated by the former chairman of the US Federal Reserve System (FRS) Ben Bernanke.
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According to him, digital assets “were conceived as a replacement for fiat, but did not succeed in this.”
“If bitcoin were an alternative to fiat money, you could use it to buy groceries. Nobody buys groceries with bitcoin because it is too expensive and inconvenient,” Bernanke said.
The former official also criticized the comparison of the first cryptocurrency with gold. He pointed out that the precious metal “has a base value to use”, while in the case of bitcoin it is “creating ransomware or something like that.”
“One of the risks associated with bitcoin is that it could be subject to a lot more regulation, and I think that anonymity is also at risk,” the economist suggested.
Bernanke led the Fed from 2006 to 2014. In this post, he advocated planning for inflation by issuing the dollar.
After his civil service, the economist joined Kenneth Griffin’s Citadel hedge fund as an advisor. In 2022, the latter admitted his skepticism about digital assets was wrong and announced the company’s entry into the cryptocurrency market as a liquidity provider.
Previously, the former head of the Fed took a more supportive stance towards bitcoin, according to a letter to the US Congress dated November 2013. At the time, Bernanke said that cryptocurrencies “could have long-term prospects, especially if innovation leads to a faster, safer and more efficient payment system.”
In May 2022, billionaire Ray Dalio called bitcoin a good insurance against inflation, but not a full-fledged alternative to gold.
Recall that analysts at Bank Of America pointed to an increased relationship between the first cryptocurrency and the stock market, in contrast to the precious metal.
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