Bitcoin Looks Like A Bubble According To One Central Banker
New Zealand's central banker warns that the current Bitcoin boom has the hallmarks of a bubble and that the cryptocurrency is too unstable to be useful in the future.
Reserve Bank of New Zealand Acting Governor Grant Spencer recently talked to TVNZ about his views on the digital currency which has seen a massive spike in price in the past week alone. According to Spencer, this is a "classic case" and as with any bubble, nobody knows when it will burst.
"It looks remarkably like a bubble forming to me," Spencer said. "Over the centuries we've seen bubbles, and this appears to be a bit of a classic case. With a bubble, you never know how far it's going to go before it comes down."
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And he is not alone as other central bankers have expressed their concern over the cryptocurrency's success. Several have suggested regulation to impose control on its price.
Bitcoin has soared more than 1,500 percent this year, and about 85 percent in just the past two weeks. The cryptocurrency rose by over $2,000 over the course of a few days as people rush to buy the digital currency in the hope it will become a legitimate alternative to gold or traditional fiat currency. The digital currency's total value has now surpassed even whole economies as the price of each coin has reached absurdly high values.
The massive surge in price comes as several governments expressing their intent to regulate the digital currency. Governments in Europe, worried about the cryptocurrency being used to launder money and evade taxes, are planning to impose new legislation requiring traders to disclose their identity, a possibly massive blow given that anonymity is one of its most sought-after aspects.
While some proponents of the currency have said that it is the future of finance, Spencer has some words for them. The central banker said he believes that digital currencies are the future. However, Bitcoin isn't a template for that future.
"I think digital currencies, cryptocurrencies, are a real and serious proposition for the future. I think they are part of the future, but not the sort that we see in bitcoin," he said. "I think a cryptocurrency that has a more stable value will be the sort of cryptocurrency that's more useful for the future."
