Bitcoin ‘won’t catch on as an alternative form of money’: Ben Bernanke

Former Federal Reserve Chairman Ben Bernanke said he didn’t think Bitcoin would prevail “as an alternative form of money.”

bitcoin BTCUSD,
and other cryptocurrencies “have been successful as a speculative investment,” Bernanke said in an interview with CNBC’s Squawk Box that aired Monday morning. “You’re seeing the flip side of that right now,” Bernanke said.

Bernanke made the comment after bitcoin fell more than 55% from its all-time high in November, while ether ETHUSD,
is down more than 58% from its record high, according to CoinDesk data. The Nasdaq Composite COMP,
has lost about 27% from its peak.

“If bitcoin were a replacement for fiat money, you could use bitcoin to buy your groceries. No one buys groceries with bitcoin because it’s too expensive and too cumbersome,” Bernanke said in the CNBC interview. “The price of celery varies radically from day to day relative to bitcoin, and hence there is no stability in the value of bitcoin either,” Bernanke said.

Bitcoin supporters have argued that the Lightning network, layered on top of the Bitcoin blockchain, could improve speeds and lower fees for transactions on the network.

Keywords: Bitcoin’s future isn’t as a payments network, says FTX’s Sam Bankman-Fried

Bernanke also said he doesn’t believe bitcoin has the potential to serve as a “store of value” or “digital gold,” a narrative supported by many cryptocurrency advocates.

“Gold has an underlying use value. You can use it to fill voids. The underlying utility of a bitcoin is to make ransomware or something like that,” Bernanke said in the interview.

Bernanke’s views on digital assets seem to have evolved over the years. In 2013, the Fed chairman referred to the central bank in a letter to the Homeland Security Committee longstanding view that while virtual currencies may pose risks related to law enforcement, “there are also areas where they hold promise over the long term, particularly as innovations foster a faster, safer, and more efficient payment system.”

In 2015, Bernanke told Quartz that Bitcoin is “interesting from a technological point of view” but it “has some serious problems”, citing its volatility and anonymity.

Read: Crypto enthusiasts sniff at Buffett, Munger comments on Bitcoin. “It took decades for them to decide to invest in Apple,” says one analyst.

Also read: More and more consumers want to use cryptocurrencies for purchases, but merchants are reluctant to accept them Bitcoin ‘won’t catch on as an alternative form of money’: Ben Bernanke

Brian Lowry

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