"Bitcoin is Risky," says BIS Head of Cryptocurrencies and Unconventional Stocks

“Bitcoin is Risky,” says BIS Head of Cryptocurrencies and Unconventional Stocks

By bit.team

The Bank for International Settlements (BIS) remains skeptical on Bitcoin, echoing the sentiments of many traditional banking institutions.

Diving into the BTC as an investment is unacceptable

The BIS, which oversees central banks around the world, may be open to exploring central bank digital currencies (CBDCs), but not to the BTC. BIS General Manager Agustin Carstens gave a speech for the Hoover Institution at Stanford University and explained his distrust of the value of Bitcoin. As reported by Bloomberg, he said:

“Investors should be aware that Bitcoin may well fail completely, because the system becomes vulnerable to most attacks when it approaches its maximum supply of 21 million coins.”

Therefore, Carstens classified Bitcoin as ” inherently risky.” According to the CEO, stablecoins can also be no better, as, according to him, they can cause “management problems” because they are supported by a private person. Stablecoins are virtual currencies that are supported by traditional fiat currencies in a 1: 1 ratio.

Although Carstens is skeptical about cryptocurrencies and stablecoins, he believes that the central bank’s digital currencies are nevertheless worth studying. However, he states that if CBDCs were to be issued, it should be done by central banks and no other organization. Carstens explained:

“Healthy money is central to our market economy, and central banks are uniquely positioned to do so. If digital currencies are needed, they should be issued by central banks.”

Carstens ‘ distrust of Bitcoin echoes that of many central bankers, such as European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, who have also taken a more conservative stance on BTC. Both seem to classify Bitcoin as a more speculative asset, and Bailey said earlier this week that he doesn’t think Bitcoin and other cryptocurrencies will stand the test of time.

S&P World Says Bitcoin Has Gone Mainstream

The S&P World Monetary Information and Analytics Agency released a report last week on the current situation with cryptocurrencies. It says that cryptocurrencies have become mainstream and seem likely to remain forever, as more and more corporations are providing cryptocurrencies, and their number is growing worldwide.

Cryptocurrency may seem like a separate segment or an experimental phase for corporations, but business consultants say they are taking it more and more seriously.

The report says that cryptocurrency adoption may be growing in countries where people “seek to protect their income from inflation and money controls,” or for faster and cheaper money transfers.

Also, last week, Jim Wiederhold, S&P World’s affiliated director of goods and things, wrote an article in which he said:

“The current enthusiasm for Bitcoin pays homage to the gold rush in the western United States from 1848 to 1860. U.S. enthusiasm for gold has increased dramatically over this time period.”

The analyst determined that not so long ago, the parallels between these two assets have grown. They are valuable because each of them is small, “can potentially be held outside of standard money markets” and is a good means of protection against inflation.

“The problems of BTC theft were rampant a few years ago, but as the asset becomes more popular, these concerns are fading.”

The analyst concluded that, although gold is an additional asset, Bitcoin is gradually becoming just an affordable and convenient asset for the main buyers.”