Bitcoin Cannot Be Considered A Medium of Exchange, Says Goldman Sachs Executive
Bitcoin price volatility has been the subject of speculations, with many suggesting that this could hinder its adoption mainstream. Goldman Sachs Group Mossavar-Rahmani further reinforces this notion and believes that the leading coin cannot be used as a medium of exchange.
Volatility a Major Detriment for Adoption
Rahmani, who heads the investment strategy group for Goldman Sach consumer and investment management division, spoke extensively about bitcoin in a briefing on Wednesday. Rahmani believes that bitcoin volatility does not bode well for adoption. According to her, an asset with long-term volatility cannot be considered as a medium of exchange.
She further explains that bitcoin’s growing popularity does not mean that it can become a store of value in the future. “Just because everybody piles into an idea and talks it up doesn’t mean it’s a store of value,” she added.
Rahmani also compared the cryptocurrency rise in value in 2021 to GameStop Corp shares that retail investors stimulated. Bitcoin has enjoyed a massive start to the year, surging by more than 100 percent and hitting a record of $41,000 in early January. However, it has dropped to around $37,000 at the time of writing.
Bitcoin Volatility A Talking Point for Critics
Despite the revolutionary nature of Bitcoin in the past decade, critics have pointed out the volatility of the coin as a significant hindrance in adopting it as a store of value. Several regulatory bodies worldwide, including that of the United Kingdom and New Zealand, recently warned citizens about the dangers of buying bitcoins.
European Central Bank council member Gabriel Makhouf recently stated that bitcoin investors should be prepared to lose all their money due to its volatile nature. Despite these criticisms, Bitcoin has continued to grow with more institutions purchasing the coin as a hedge against inflation and government action.
Also, payment processing platforms like Visa and PayPal have made significant developments towards integrating cryptocurrencies. While banks like JPMorgan have launched their digital currency, and the crypto ecosystem continues to grow.