Bitcoin and other digital currencies are not backed by anything, and the world’s largest cryptocurrency is more like a speculative asset, according to a statement made by the Chairman of the Federal Reserve, Jerome Powell. During a virtual event organized by the Bank of International Settlements, Powell said that cryptocurrencies are highly volatile and digital assets like Bitcoin are a substitute for gold rather than for the dollar.
“Bitcoin is a substitute for gold rather than for the dollar.”
“Bitcoin and other cryptocurrency assets are more of an asset for speculation, so they’re not particularly in use as a means of payment. It’s more a speculative asset. It’s essentially a substitute for gold rather than for the dollar. Crypto assets are highly volatile, see Bitcoin, and therefore not very useful as a store of value, and they’re not backed by anything,” Powell said. The Federal Reserve Chairman also highlighted the high energy issues related to the mining of Bitcoin and other cryptocurrencies.
“It is not possible for Bitcoin to replace the US dollar as a currency.”
“I think with cryptocurrency assets, the public needs to understand the risks. There’s the volatility; there’s also the energy requirements for mining and the fact that they’re not backed by anything,” the Fed chairman added. Earlier, the US Treasury also proposed strict regulations regarding Bitcoin and other cryptocurrency transactions in the country, but some US States are working on a clear regulatory framework for the treatment of Bitcoin and other digital currencies under their jurisdiction. In his latest address, Powell also mentioned that it is not possible for Bitcoin to replace the US dollar as a currency.