According to the vision of the Governor of the Bank of England (BoE), Andrew Bailey, Bitcoin has no intrinsic value. It states that the value of the main cryptocurrency is, on the contrary, extrinsic.
By this, the official means that the strength or content of Bitcoin itself is non-existent. On the contrary, he maintains that the possible value is based on speculation and, in his opinion, could at any moment become zero.
It manifests feeling nervous, for all those people who have put their investments in this digital currency. During a question and answer event, the governor of this institution said that those who have money in Bitcoin “They must prepare to lose everything”.
Bitcoin’s value is not intrinsic
This session with the public, in which the senior BoE official appeared, was covered by the Reuters web portal. In it, Bailey confirmed his longstanding belief that Bitcoin has no intrinsic value.
“I have to be very honest, it is very difficult to ensure that Bitcoin has what we usually call intrinsic value”he stated bluntly. “It has extrinsic value to the extent that people want to use it”, the governor pointed out.
It is not the first time that Bailey has expressed this opinion about the most important of the cryptocurrencies in market capitalization. In early March, serving as director of the Financial Conduct Authority, He affirmed to a parliamentary commission that Bitcoin is incompatible with money.
The same opinion was held last September, already as president of the BoE, during a conference. At that time he explained that the “Bitcoin has no intrinsic value and therefore has nothing to do with money”.
Recognize the limitations of fiat money
Despite Satoshi Nakamoto’s scorn against cryptocurrency, Bailey acknowledges the limitations of fiat money. He explains that, despite the lack of intrinsic value of Bitcoin to fulfill the functions of money, other types of digital currencies can be a solution.
In this case, it refers to stablecoins, which could offer a “beneficial use”. Among these positive aspects, he referred to the reduction of friction with the payment system.
Thus, it must be taken into consideration that the suspicion is not against digital currencies in general, but particularly, against Bitcoin. In this regard, last July, this official announced that the BoE would be working on a project to develop a Central Bank Digital Currency (CBDC).
Everybody wants a CBDC
Since Facebook announced its intentions to create a stablecoin (Libra), the governments of different countries felt threatened. Another of the actors who came to increase the danger was the People’s Republic of China.
For 5 years, Beijing, which also does not view the value that Bitcoin has acquired with much sympathy, has been working on a digital version of the Yuan. Tests have been underway for months, which can be interpreted as an indication of an early launch of its CBDC.
Fears on the part of China’s commercial rivals have not been slow to surface. As a consequence, various nations around the world have not wanted to be left behind in the cryptocurrency race and have announced projects in development.
Data to take into consideration
- Bitcoin’s value is not intrinsic, so this cryptocurrency cannot be said to be related to money, says the president of the BoE.
- The value of the main cryptocurrency is sustained to the extent that people want to use it, therefore, it is extrinsic, he maintains.
- All people, Bailey cautions, contemplating investing their money in Bitcoin should prepare to lose it all.
- The Bank of England is planning to create its own centralized digital currency.