Financial officials on both sides of the globe are taking the opportunity to criticize the value and usefulness of cryptocurrencies, while media coverage of the space is increasing following Coinbase’s direct listing on Nasdaq.
Bank of Korea Governor Lee Joo-yeol said after Thursday’s monetary policy meeting that cryptocurrencies have significant limitations as a means of payment, local affiliate KBS World reported.
Arguing that it is difficult to accurately value cryptocurrencies because of their volatility, Lee said KBC has not changed its stance that they have no intrinsic value.
Lee also referred to Federal Reserve Chairman Jerome Powell, noting that the Fed chief shared his views on the crypto space.
An hour earlier, Powell said in a virtual interview with the Economic Club of New York that cryptocurrencies were purely speculative, adding that they would not be accepted as a means of payment any time soon.
They’re really speculative machines. They are not actively used as currency, Powell said according to CNBC.
Given Powell and Lee’s comments, one might wonder about the recent adoption of cryptocurrencies by major global payments companies. Visa, Mastercard and PayPal have all started introducing crypto-currency payment options in recent months, while Tesla has introduced bitcoin (BTC) as a payment option for its electric car business.
This is not to say that bitcoin and other cryptocurrencies are the right way to pay. The average rate for a bitcoin transaction is currently around $30, due to the limited block size and resulting network congestion. For this reason, payment systems often have to pay these transaction costs as an operating expense. At this point, they can’t afford it anymore, just like they did with the Steam gaming platform in 2017.
One point of agreement between Powell and the crypto community is the suggestion that cryptocurrencies can be compared to gold – but for very different reasons. Proponents of cryptocurrencies (especially bitcoin) claim that the technology can be used as a long-term store of value, much like precious metals.
Powell, however, meant this comparison as a mockery. The Fed chairman’s view on gold seems no better than his view on cryptocurrencies.
For thousands of years, people have placed a special value on gold that it does not have, according to the president of the U.S. National Currency Printing Center.
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