The debate over Bitcoin’s importance in transactions continues to rage with each passing day. The Bank of England’s Governor, Andrew Bailey, is the latest notable figure to slam the flagship cryptocurrency.
According to Bailey, Bitcoin as a digital currency has no known value and is not suitable for payments. The British Central Bank chief believes that Bitcoin can never be an alternative to fiat, and people cannot compare them.
As a result, Bailey warns that adopting Bitcoin is a sure way to a financial disaster that users can better imagine. The warnings came shortly after the crypto market slump.
Bailey on Cryptocurrency
The Bank of England chief warns against the adoption of cryptocurrency, especially Bitcoin. He further noted that the economy of any country depends on physical assets, not digital. Bitcoin is not stable enough to become an alternative currency for the mainstream.
However, the recent crypto market crash lends credence to what Bailey is talking about. The entire crypto industry shed almost $500 billion in May alone. For its part, Bitcoin has lost more than 25% of its value over the past couple of weeks.
Since February, the crypto market has been bleeding after Russia’s military offensive against Ukraine. Some months later, the market is yet to recover fully, with storms coming after a brief respite.
Meanwhile, Bailey admitted that not all aspects of cryptocurrencies are useless. Blockchain technology is one of them. Blockchain technology is one of the critical components in developing digital currencies.
The Bank of England governor noted that the British Central Bank wants to create its own digital token. Bailey added that central banks’ digital tokens are the perfect tool to rival privately developed digital tokens.
Many central banks worldwide are working on their CBDC pegged to their national currencies. Bailey revealed that this is what regulators must do to prevent Bitcoin’s adoption.
Furthermore, central banks’ digital tokens are centralized compared to decentralized cryptocurrencies. They are issued by central banks that control their circulation and use within their countries.
One argument against the use of CBDC is that it is location-specific, hence the preference for cryptocurrency. However, the lack of control has been the reason regulators want to have their own centralized tokens.
Bitcoin is not Good for Payment
Bailey further argues that people cannot place the largest cryptocurrency on the same stage as fiat. Bitcoin lacked the practical process to make a convincing case in the financial sector in terms of payment.
The price fluctuations are why cryptocurrencies can not be a suitable alternative means of payment. Crypto has value in the eyes of its holders only, but in the real world, it is unseen.
Bailey was never a fan of cryptocurrencies; he has previously criticized the use of Bitcoin by calling it names. Last year, he described cryptocurrencies as dangerous and downright criminal.
His view about crypto is similar to that echoed by Christine Lagarde, the European Central Bank president. Lagarde claimed on Sunday that digital currencies are based on zero value.