Criticism of Bitcoin's Speculative Nature and Inefficiency
"Investors Must Be Aware of Potential Large-Scale Losses" Mentioned
Emphasis on the Need for Digital Dollar Development
[Asia Economy New York=Special Correspondent Baek Jong-min] Janet Yellen, U.S. Treasury Secretary, warned about the risks of Bitcoin and expressed the view that a digital dollar should be developed as an alternative.
Secretary Yellen made these remarks on the 22nd (local time) during a virtual discussion hosted by The New York Times.
Yellen stated, "I do not think Bitcoin is widely used as a means of transaction," and added, "I am concerned that it is often used for illegal finance."
She also criticized, "Bitcoin transactions are very inefficient and consume enormous amounts of energy." CNBC reported that this pointed to the massive electricity consumption issue involved in Bitcoin mining.
Yellen has been issuing warnings about Bitcoin from before her appointment until recently, but has not been able to curb the rapid rise in Bitcoin prices.
Recognizing this, Yellen issued a more aggressive warning about Bitcoin on this day. She mentioned, "You should know that Bitcoin is a highly speculative asset and can have extreme volatility. I am concerned that investors could suffer significant losses."
While criticizing Bitcoin, Yellen said, "It is reasonable for central banks to issue digital currencies."
Yellen noted, "Many Americans have difficulty accessing payment systems and bank accounts. A digital dollar issued by the central bank would help in such situations."
She also predicted that the digital dollar could be used as a fast, safe, and inexpensive means.
U.S. media interpreted Yellen’s remarks as the Treasury Department agreeing with the Federal Reserve, the U.S. central bank, on introducing a digital dollar.
Bloomberg quoted Josh Lipsky, Director of GeoEconomics at the Atlantic Council, saying, "This is the most progressive opinion from a Treasury Secretary regarding the issuance of a digital dollar." Bloomberg also cited the issuance of the digital yuan by China’s People’s Bank of China as an example.
Bitcoin experienced a sharp drop of as much as 17% during the day, falling to the mid-$47,000 range, but reduced the loss and is trading around $53,000, down about 7%.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
