The most important of the crypto currencies, Bitcoin, according to the BoE Governor’s opinion, has no intrinsic value.
According to the view of Bank of England (BoE) Governor Andrew Bailey, Bitcoin has no intrinsic value. He claims that the value of the main krypton currency is, on the contrary, extrinsic.
By this, the official means that the strength or content itself of Bitcoin is non-existent. On the contrary, he argues that the possible value, is based on speculation and, in his opinion, at any time could become zero.
He says he feels nervous, because of all those people who have put their investments in this digital currency. During a question and answer event, the governor of this institution, said that those who have money in Bitcoin „must prepare themselves to lose everything“.
The value of Bitcoin is not intrinsic
This session with the public, in which the senior BoE official appeared, was covered by the Reuters website. In it, Bailey confirmed his long-held belief that Bitcoin has no intrinsic value.
„I have to be very honest, it’s very difficult to ensure that Bitcoin has what we usually call intrinsic value,“ he said bluntly. „It has an extrinsic value to the extent that people want to use it,“ the governor said.
This is not the first time that Bailey has expressed this opinion about the most important of the crypt currencies in market capitalization. In early March, serving as a director of the Financial Conduct Authority, he told a congressional committee that Bitcoin is incompatible with money.
He held the same opinion last September, already as president of the BoE, during a conference. At that time, he explained that „Bitcoin has no intrinsic value and therefore has no relation to money.
For Andrew Bailey, Governor of the BoE, Bitcoin has no intrinsic value. For Andrew Bailey, Governor of the BoE, Bitcoin has no intrinsic value.
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Recognizes the limitations of fiat money
Despite the contempt uttered against Satoshi Nakamoto’s cryptomoney, Bailey acknowledges the limitations of fiat money. He explains that, despite Bitcoin’s lack of intrinsic value to fulfill the functions of money, other types of digital currencies can be a solution.
In this case, he refers to stablecoins, which could offer a „beneficial use“. Among these positive aspects, he referred to the reduction of friction with the payment system.
Thus, it must be taken into consideration that the mistrust is not against digital currencies in general, but particularly against Bitcoin. In this sense, last July, this official announced that the BoE would be working on a project to develop a Central Bank Digital Currency (CBDC).
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Everyone wants a CBDC
Since Facebook announced its intentions to create a stablecoin (Libra), governments in different countries felt threatened. Another actor that came to increase the danger was the People’s Republic of China.
For the last five years, Beijing, which doesn’t like the value that Bitcoin has acquired, has been working on a digital version of the Yuan. Tests have been underway for months, which can be interpreted as an indication of a soon-to-be-released CBDC.
Fears about China’s commercial rivals have quickly surfaced. As a result, several nations around the world have not wanted to be left behind in the crypto-currency race and have announced projects in development.
Data to consider
Bitcoin’s value is not intrinsic, so it can’t be said that this crypto currency is related to money, says the BoE president.
The value of the main kryptomone, is sustained to the extent that people want to use it, therefore, it is extrinsic, he says.
All people, Bailey warns, who contemplate investing their money in Bitcoin, should prepare to lose everything.
The Bank of England is planning to create its own centralized digital currency.