Davos: Bitcoin is not a currency

Davos is clear on bitcoin: It's an interesting investment, but please don't call it a currency.Bitcoin's volat...

Posted: Jan 26, 2018 12:11 PM
Updated: Jan 26, 2018 12:11 PM

Davos is clear on bitcoin: It's an interesting investment, but please don't call it a currency.

Bitcoin's volatile ascent has transformed it from a tech industry curiosity to a major topic of discussion at this year's World Economic Forum.

Yet the consensus in Davos, Switzerland, is that bitcoin will never be as useful as the dollar or yen in the real world.

"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.

Cecilia Skingsley, deputy governor of Sweden's central bank, said she had "no problem with people using [bitcoin] as an asset to invest in."

"But it's too volatile to be used as currency," she added.

Bitcoin prices, which peaked near $20,000 in December, have fallen sharply to under $11,000 after a series of exchange closures and talk of increased regulation raised concerns over the digital currency's future.

Davos 2018: Complete coverage

Even Davos attendees who have invested in bitcoin said its utility as a currency is limited. Jennifer Zhu Scott, an entrepreneur and cryptocurrency investor, described it as a "store of value."

"I don't think it's a currency, it's disrupting gold," she said. "A cryptocurrency can do what gold is doing much better."

The comments reflect growing anxiety over the real world applications for bitcoin, which is accepted at a smattering of retailers but has failed to find widespread acceptance.

Related: Steven Mnuchin is the British pound's new best friend

Leading online payments company Stripe said this week that it will stop processing bitcoin transactions in April. It said the huge volatility in bitcoin prices has made it impractical for making and receiving payments.

Top government officials in Davos also signaled that digital currencies have a long way to go.

"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.

British Prime Minister Theresa May echoed that sentiment, telling Bloomberg that her government would look "very seriously" at cryptocurrencies "because of the way they are used, particularly by criminals."

Larry Fink, chief executive of BlackRock, offered the most damning assessment, likening bitcoin to an "index of money laundering."

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