Tags: Ben Bernanke | Bitcoin | Cash | Currency

Ben Bernanke: Bitcoin Has 'Serious Problems'

Ben Bernanke: Bitcoin Has 'Serious Problems'

By    |   Monday, 23 November 2015 06:03 AM

Former Federal Reserve chairman Ben Bernanke warns that bitcoin has “serious problems” and while the digital currency is "interesting from a technological point of view," it’s far from ready to be replacement for traditional currency.

"We're in a world where the payments system is evolving quickly and new approaches to managing payments are proliferating, and some of the ideas around bitcoin will no doubt be useful in doing that," he told Quartz.

"But I think bitcoin itself has some serious problems. The first is that it hasn’t shown to be a stable source of value. Its price has been highly volatile and it hasn’t yet established itself as a widely accepted transactions medium."

He urged government officials to increase oversight and monitoring of digital currency activity.

"But the real serious problem that it has is it's anonymity, which is a feature, and is also a bug, in that it has become in some cases a vehicle for illicit transactions, drug selling or terrorist financing or whatever," Bernanke added.

"And you know, governments are not happy to let that activity happen, so I suspect that there will be oversight of transactions done in bitcoin or similar currencies and that will reduce the appeal," he said.

Other prominent economic voices disagree and say it’s time to dump cash and embrace the virtual digital currency – and curb terrorism funding at the same time.

“Instead of taking their anger out on virtual currencies, now is the time for governments to think seriously about the abolition of cash,” writes Bloomberg’s Leonid Bershidsky.

“Despite the Islamic State's well-known dislike of the U.S., its financial accounts seem to be kept in U.S. dollars. The terror group's revenue comes in greenbacks, whether from old- school oil smuggling, "taxes" on subjugated populations or the trade in stolen artifacts. The expenses — such as the purchase of weapons, which are also smuggled into traditional markets such as Belgium from the Balkans' former war zones, and the payment of fighters' salaries — also take the form of cash transactions,” he wrote.

“They are made possible by the huge amount of U.S. currency that is held overseas, mostly in $100 and $50 bills,” he explained.

“If Islamic State moved all its transactions, hundreds of millions of dollars a year, into the bitcoin universe, the virtual currency's rate would spike wildly. Today, only 14.8 million bitcoins have been "mined," for a total of $4.7 billion at the current exchange rate.”

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Former Federal Reserve chairman Ben Bernanke warns that bitcoin has “serious problems” and while the digital currency is "interesting from a technological point of view," it’s far from ready to be replacement for traditional currency.
Ben Bernanke, Bitcoin, Cash, Currency
406
2015-03-23
Monday, 23 November 2015 06:03 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved