Federal Reserve Chair Jerome Powell on Monday tried to throw a big, wet blanket over the cryptocurrency fever that has exploded the past several months.
Powell urged the U.S. public to take the time to understand the risks behind bitcoin and other cryptocurrencies – although the central bank itself is studying, very closely, the costs and benefits of a digital dollar.
The most important point Powell seemed to be making was that the roller-coaster nature of cryptocurrency is not something to be celebrated.
“They’re highly volatile, see Bitcoin, and therefore not really useful as a store of value,” Powell said at a virtual summit hosted by the Bank for International Settlements. “They’re more of an asset for speculation.”
Let’s take a look at the real-time investment payoffs surrounding bitcoin.
It has risen 10 times its year-ago value, worth nearly $57,000 on Monday. It was at 5,830 in March 2020.
And to those who say, “Bitcoin isn’t used like money”?
Times they are a-changin’ and Elon Musk is helping to drive the train.
Or the electric car.
The Tesla CEO famously said last month that the company was buying $1.5 billion of bitcoin and would soon accept bitcoin payment for its cars.
Powell was non-committal about the central bank considering digital currency.
“We’re not in a mode of trying to make a decision at this point,” he said. “We are experimenting with technology.”
So you’re saying there’s a chance?
Powell said there was no need to rush a perceived fix for the dollar.
“The real threshold question for us is, does the public want or need a new digital form of central bank money to complement what is already a highly efficient, reliable and innovative payments-oriented system?” Powell asked.