Former Fed chief explained bitcoin’s inability to replace fiat currency

Ben Bernanke also called cryptocurrencies a speculative asset

19.05.2022 - 08:40

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2 min

What’s new? Bitcoin will not replace fiat currencies and will not become an alternative form of money. Former US Federal Reserve System (Fed) chief Ben Bernanke expressed this opinion in an interview for CNBC.

"I don't think that #Bitcoin is going to take over as an alternative form of money," says @BenBernanke. pic.twitter.com/yl9gs6VZKX— Squawk Box (@SquawkCNBC) May 16, 2022

What other statements were made? According to Bernanke, bitcoin is successful as a speculative asset. Using the first cryptocurrency as a substitute for fiat money is expensive and inconvenient because of the volatility of its rate. If bitcoin were a real alternative, people could buy groceries with it, but no one does, Bernanke stressed.

The former Fed chief also compared bitcoin to gold. According to the official, gold has a basic use value, while bitcoin is used for illegal activities. In addition, one of the risks to cryptocurrency is the possible introduction of regulation and the fight against anonymity.

What events happened before? Billionaire and Bridgewater Associates founder Ray Dalio called bitcoin not a good competitor against gold. He noted that central banks in various countries do not accept bitcoin as a reserve asset. Dalio attributed this to the fact that digital asset is banned in a number of countries and has privacy issues.

Bloomberg Intelligence senior analyst Mike McGlone said that only bitcoin and Ethereum would benefit in the long run from the US Federal Reserve System’s (Fed) policy tightening. He added that temporary declines in cryptocurrency rates amid a falling stock market were the norm.

On May 17, the Fear & Greed Index of the crypto market dipped to its lowest point since March 2020 at 8/100. The digital asset market plunged into extreme fear after the rate collapse of the TerraUSD (UST) stablecoin and its backing token LUNA, whose value collapsed by more than 99%. GetBlock Magazine’s editorial team has compiled the most negative predictions for the development of the situation with bitcoin. More details read in our special feature.

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