President of the Federal Reserve Bank of Minneapolis: “Bitcoin is for Toy Collectors”
Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, said on February 8, 2018, that he does not think that bitcoin is for serious investors. Kashkari further added, “I don’t really think of bitcoin as a currency. I think of it as a novelty. The idea that these virtual currencies are ever going to compete with the dollar is hard to fathom.”
Easy to Be a Naysayer in 2018
Kashkari, who was also a Bush administration official, stated earlier that he is a believer in blockchain technology that supports the Bitcoin network, but not bitcoin the currency. He made these remarks at the MN High Tech Association 2017 Spring Conference in April last year. At the same conference, he also expressed concern over how easy it is to generate new altcoins.
At the town hall, the President of the Reserve Bank spoke on a wide range of financial topics and began by giving a brief history of the institution including its founding. When asked about his views on bitcoin he said:
“If you live in any modern advanced economy I would stick with the dollar.”
Kashkari went on to further state that he would leave bitcoin for the toy collectors. It then comes as no surprise that he finds it problematic to compare gold with bitcoin.
Even though the cryptocurrency is limited in supply like gold, he is against the fact that more bitcoin can be minted effortlessly. The fact that there is no barrier to entry for anyone to create a new rival cryptocurrency is another difficult concept to grasp. Herein also lies the lack of quality information that could help refine Kashari’s views on the subject.
Furthermore, the Minnesota official does not view bitcoin as an asset, investment or a commodity. He is also aware that with the influx of so many users on the blockchain, the network has slowed the speed of transactions and increased costs too. These two features, coupled with Kashkari’s clear disdain, provide easy arguments for bitcoin’s inability to perform as a currency.
Global Attention Despite Technical Misgivings
The bank president’s remarks also come at a time when the world is experiencing a global equity meltdown. This hurried selling has spread to bitcoin and other cryptocurrencies. Bitcoin, which hit a record price of $19,000 after a dramatic 2,000 percent rise in 2017, had corrected to levels of $6,000 before bouncing back to settle near $8,000.
Global investors, and particularly bitcoin investors, need to keep an eye out for another financial authority too. Jerome Powell, the 16th head of the Federal Reserve Bank appointed by President Trump, has made several early remarks that he wasn’t against bitcoin but was against the idea of a central bank issuing a digital currency.
Powell stated at the Economic Club of New York in June 2017, “[Cryptocurrencies] are associated with money laundering and those sorts of issues, but we’re not broadly opposed or supportive of alternative currencies.”
Also speaking at the World Economic Forum in Davis on January 25, 2018, Steven Mnuchin, who is currently serving as the US Treasury Secretary, said:
“My number one focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things is that we want to make sure that they’re not used for illicit activities. We encourage fintech and innovation, but we want to make sure all of our financial markets are safe.”