Cryptocurrencies have seen their fair share of criticism.
However, they might have just received some of the harshest comments from an established figure yet.
Speaking at a lecture, Agustin Carstens, the General Manager of the Bank for International Settlements – an institution which serves as a bank for central banks – shared his candid views about cryptocurrencies, and they were not very positive towards the new financial asset.
Cryptocurrencies are not here to stay
According to Carstens, history suggests that cryptocurrencies are not going to be a viable form of conventional money.
He mentioned that the very notion of being without any authority is what works against cryptocurrencies, as their non-liable nature means that there is no authority to question, contact, or to derive trust from for its issued currency.
He also stated that while the cryptocurrencies claim to be different, they are still associated with the same financial infrastructure just as other commodities do, especially when one has to go through third-parties, such as cryptocurrency exchanges, to be able to use these digital assets.
He further mentioned that these circumstances coupled with the other issues that cryptocurrencies have to face work against them.
Carstens then mentioned the “inefficiency” of Bitcoin, both as a payment system and as a technology.
He stated that being a new technology does not mean that it is a better technology, and went on to elaborate that while Bitcoin could have been conceptualized as an alternative payment method to avoid government involvement, it has since become something else.
After sharing these comments, Carstens mentioned that cryptocurrencies are more lucrative for those who are looking to use them in illegal settings since that is the market segment that does not care about volatility as much as conventional investors or payment providers do.
He also mentioned that the price value itself is more due to a “speculative mania” than anything else, which calls for “a strong case of policy intervention.”
He further stated that central banks should work as the guardians of stable payment methods. While encouraging competition in financial markets by “banks and non-banks alike,” he emphasized that new entities – even apart from Bitcoin and cryptocurrencies – should be held at the same level of standards as established institutions do to ensure a “level playing field” on both ends of the spectrum.
Concluding his statements, Carstens stated that seeing cryptocurrencies’ sudden rise should not make one overlook that the trust with existing payment methods cannot be replaced.
Do they hold any weight?
Coming from an experienced individual like Carstens, they do hold some significance regarding where they come from.
However, it does not mean that cryptocurrencies can be written off easily. While Carstens has spent years in the conventional financial industry, it is time for that industry to adapt according to the new technological advances.
Cryptocurrencies get bad press because they are an invention that is trying to change the world as we know it – for the better. It is never an easier task, but it does mean that harsh comments such as these should hinder progress.
Therefore, while we should know of these comments, they do not inscribe the future of cryptocurrencies in stone. The future for them could be as meek as Carstens suggests or as bright beyond anyone’s imagination. Only time can tell for certain, what we can do as part of the cryptocurrency community is to do our best to establish this financial asset as a credible sector and a viable solution for future generations.