Davos does not want to call bitcoin a currency even though it agrees that it is an interesting. That is what Davos appears to be clear about when it comes to bitcoin.
At this year’s World Economic Forum, bitcoin has become a major topic of discussion from being a tech industry curiosity because of the very volatile but meteoric rise of the virtual currency over the last one year.
Yet, in the real world, this cryptocurrency would never be close to as useful as the dollar or yen, is the consensus in Davos, Switzerland.
“The central banks have been nurturing the [financial] system for centuries… we’ve got a good thing going on,” Nobel laureate Robert Shiller said at a debate about the cryptocurrency.
She had “no problem with people using [bitcoin] as an asset to invest in”, said Cecilia Skingsley, deputy governor of Sweden’s central bank.
“But it’s too volatile to be used as currency,” she added.
While bitcoin prices had touched as high as $20,000 in December, the price fell drastically to below $11,000 driven by a number of closures of bitcoin exchanges and debates over enhanced regulation which resulted in increased concerns about the future of the digital currency.
The utility of bitcoin as a currency is limited, said even those at Davos with some sizable investments in eh virtual currency. Bitcoin was described as a “store of value” by Jennifer Zhu Scott, an entrepreneur and cryptocurrency investor.
“I don’t think it’s a currency, it’s disrupting gold,” she said. “A cryptocurrency can do what gold is doing much better.”
Bitcoin tends to be accepted at a smattering of retailers but is far from being accepted in a widespread manner and the comments made at Davos show increasing anxiety over lack of applicability of the virtual currency in the real world.
Stripe, a leading online payments company said that it would end transactions and processing of bitcoin from April, the company said this week. Bitcoin was made impractical for making and receiving payments because of the huge volatility in bitcoin prices, the company said.
Many of the top government officials in Davos also indicated that there is a long way to go for digital currencies.
“We encourage fintech, we encourage innovation, but we want to make sure that all of our financial markets are safe and aren’t being used for illicit activities,” said U.S. Treasury Sec. Steven Mnuchin.
The sentiments were echoed by British Prime Minister Theresa May. She said that her government would look “very seriously” at cryptocurrencies “because of the way they are used, particularly by criminals.”
Bitcoin was linked to an “index of money laundering” by Larry Fink, chief executive of BlackRock , which is by far the most damning assessment.
(Adapted from Money.cnn.com)