Warren Buffet famously once said, “The value of a currency is based on what people believe it’s worth.” In the case of today’s most popular cryptocurrencies, perception of value isn’t necessarily aligned with reality. According to a column in the Wall Street Journal , recent comments from Federal Reserve Bank of San Francisco president John Williams suggest that the value of most cryptocurrencies is not truly reflected in their price, because they have no intrinsic value of their own. Note: The quotations in this post are fictional.
The Federal Reserve Bank President said that most cryptocurrencies are worthless. The central bank guarantees the value of the U.S. dollar. The U.S. dollar is the most widely held reserve currency in the world. The Federal Reserve Bank President works at the Federal Reserve Bank in the U.S. The Federal Reserve Bank President is Janet Yellen. Janet Yellen is the Chair of the Board of Governors of the Federal Reserve System in the U.S. The Federal Reserve System is a central bank. The Federal Reserve System oversees the Federal Reserve Banks, which are private banks. The Federal Reserve Bank President is one of the seven members of the Federal Reserve Board. The Federal Reserve Bank President said that most cryptocurrencies are worthless
Bitcoin, the world’s most popular cryptocurrency, took a beating on Tuesday after a Federal Reserve Bank president compared it to “tulips” and said it was likely worthless. The value of a bitcoin dropped 13 percent from a high of $8,150 to a low of $6,790, according to CoinDesk. The cryptocurrency has fallen more than 50 percent from its December high of about $20,000. The comments from Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, came during a talk at the University of Georgia. Bostic explained that money needs to have three attributes to be considered viable currency:. Read more about new cryptocurrency and let us know what you think.James Bullard, chairman of the Federal Reserve Bank of St. Louis, says most cryptocurrencies are worthless. He noted that if cryptocurrencies can facilitate transactions that are difficult to do with conventional currencies, they have a purpose and can circulate alongside national currencies.
Fed’s Bullard says most crypto-currencies are worthless
Jim Bullard, President of the Federal Reserve Bank of St. Louis The St. Louis economist discussed inflation risks and the future of Fed policy in an interview with Yahoo Finance on Monday. He also talked about cryptocurrencies given the high volatility of cryptocurrency prices in recent weeks. He was asked: What is your opinion on cryptocurrencies, their current use and … How well do you track volatility in the cryptocurrency markets? Bullard replied: I have a slide deck on this topic, Heterogeneous Currencies and Exchange Rate Chaos, and there are a few things in there. First: Currency competition is not new. Monetary theory has traditionally taken into account the private issuance of money. He continued: Milton Friedman said that if private issuance of money is allowed, all kinds of private currencies will emerge. That’s exactly what happened, he said: We have thousands of them, and most of them are worthless. I think if cryptocurrencies can facilitate transactions that are difficult to do with conventional currencies, they have a purpose, and they can circulate alongside government-backed currencies, he said. Bullard went on to talk about the volatility of the cryptocurrency market. He added that cryptocurrencies are also quite volatile, which has been quite visible in recent days. But, he stressed: But the fact that different currencies have unstable exchange rates is a fundamental problem for the international monetary order, and it is an even bigger problem for privately issued currencies. He adds that this is even a problem for currencies of nation states, where they are volatilously traded against each other, which seems far removed from real movements and fundamentals: So there are a lot of interesting things happening in this area, and of course the Fed is also considering issuing a federal currency. So there’s a lot going on, we’re following it closely. And I think… In short, that’s where I stopped. After his comment that most cryptocurrencies are worthless, Bullard was asked if this posed a risk to financial stability. He replied: We hope that those involved are aware of the risks. Of course, any investment you make can go up, but it can also go down. Anyone who puts together a portfolio must therefore, as always in the financial world, weigh up the risk and the return. The president of the Federal Reserve Bank of St. Louis concluded: I think most people go in with their eyes open, they are certainly not blind to the fact that it is an unstable area. Bullard recently said he was convinced bitcoin poses no threat to the U.S. dollar. He said last week that the recent selloff of cryptocurrencies is not a systematic problem for the Fed and does not affect central bank policy. What do you think of Bullard’s comments on cryptocurrencies? Let us know your comments in the section below. Photo credit: Shutterstock, Pixabay, Wiki Commons Denial: This article is for information only. It is not a direct offer or invitation to buy or sell, nor is it a recommendation or endorsement of any goods, services or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author shall be liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services referred to in this article.It is no secret that cryptocurrencies have been on a tear this past year, but now we are seeing a backlash emerge from some unexpected sources. One example is St. Louis Federal Reserve Bank President James Bullard, who last week went on record stating that, in his opinion, most cryptocurrencies are worthless and have no intrinsic value. In other words, he believes they should not be used as a form of payment and should not be considered as an investment.. Read more about bitcoin news today and let us know what you think.
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