Bitcoin hasn’t been doing all that well as of late. The world’s number one digital currency by market cap has seemingly dropped below $50,000 and has stayed there for the past two weeks or so, but while BTC has struggled in the past, the Bank of England has issued a statement explaining BTC has the potential to become “worthless” in the future.
The Bank of England Expresses Crypto Concern In New Report
In a recent report published by the financial institution, executives of the bank claimed that bitcoin lacked worth. They also expressed concern about the cryptocurrency’s recent rise and fall from $68,000 to about $47,000 at press time. Sir Jon Cunliffe – the deputy governor of the Bank of England – warned that the time had come to prepare for inherent risks that may arise with more people resorting to crypto to establish wealth.
Discussing cryptocurrencies, he stated:
Their price can vary quite considerably, and [bitcoin] could theoretically or practically drop to zero.
The market cap of the crypto space has grown to about $2.6 trillion at the time of writing. Overall, it represents about one percent of the world’s global assets, and about ten percent of all households in the United Kingdom seemingly own some form of it. This is estimated to be about 2.3 million people holding an average of 300 pounds of crypto each.
But the Bank of England sees many problems stemming from crypto use. The institution set up a financial policy committee back in 2008 when the Great Recession occurred, and while many executives don’t believe that crypto itself poses any threat to standard financial tools and platforms, the heavy growth of the crypto space in what has been a rather short period could present several risks to traders and investors.
The bank is now issuing orders that anyone looking to get into crypto should be extremely cautious when doing so and to pay attention to ongoing developments. In its report, the bank said:
Enhanced regulatory and law enforcement frameworks, both domestically and at a global level, are needed to influence developments in these fast-growing markets in order to manage risks, encourage sustainable innovation, and maintain broader trust and integrity in the financial system.
BTC Doesn’t Work as a Currency
Thomas Belsham – who’s employed through the institution’s stakeholder and media engagement division – also said that bitcoin has ultimately failed as a currency and doesn’t live up to the standards a lot of fiat currencies are forced to contend with. He says:
The problem is that unlike traditional forms of money, bitcoin isn’t used to price things other than itself. As Bitcoiners themselves are fond of saying, ‘one bitcoin = one bitcoin,’ but a tautology does not make a currency… Simple game theory tells us that a process of backward induction should induce the smart money to get out, and were that to happen, investors should be prepared to lose everything.