Mark Carney, Governor of the Bank of England, spoke about Bitcoin at Regent's University in London on Monday evening. \"Bitcoin has pretty much failed thus far on the traditional aspects of money,\" he
Mark Carney, Governor of the Bank of England, spoke about Bitcoin at Regent's University in London on Monday evening. "Bitcoin has pretty much failed thus far on the traditional aspects of money," he said. "It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange."
His remarks contradicted Goldman Sachs, which recently sent clients a report titled "Bitcoin is Money."
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To function as money, an asset must meet three requirements: it serves as a unit of account, a store of value, and a medium of exchange. Bitcoin qualifies on all counts. The blockchain works as an accounting ledger. Over 200,000 Bitcoin transactions occurred in the past 24 hours, demonstrating Bitcoin's role as a medium of exchange. Fifty luxury flats in Dubai sold for Bitcoin. Customers spend Bitcoin on Overstock.com and other retailers every day.
Bitcoin has serious flaws as a payment tool. High transaction fees and slow confirmation times make it less practical than Litecoin or Bitcoin Cash for small purchases. Yet Bitcoin still functions as a medium of exchange. Gold, the oldest medium of exchange in human history, is far more expensive and difficult to move in small amounts than Bitcoin is. No central banker claims gold failed as money because other payment methods work better.
The volatility argument carries more weight. Price swings do make Bitcoin risky to hold. But risky and useless are different. Bitcoin holders use it as a store of value every day.
Carney's reasoning applies mostly to people in wealthy nations where currencies and markets are stable. In Venezuela, where hyperinflation has destroyed the bolívar, thousands mine and hold Bitcoin and other cryptocurrencies. Bitcoin is a safer bet than the bolívar.
The Bank of England dismisses cryptocurrency, just as mainstream finance broadly does. As adoption increases, this skepticism will fade. More institutions will ultimately align with Goldman Sachs than with the Bank of England.
MiningPool content is intended for information and educational purposes only and does not constitute financial, investment, or legal advice.
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