US Treasury Secretary warns “Bitcoin is extremely inefficient…a highly speculative asset”
US Treasury Secretary Janet Yellen once again expressed the position that Bitcoin is a highly speculative asset. Bitcoin prices showed great volatility, with the collapse of the $50,000 mark once immediately after Janet Yellen’s remark.
Janet Yellen “Bitcoin is extremely inefficient…a speculative asset”
On February 22, 2021 (local time), according to CNBC, US Treasury Secretary Janet Yellen said at a’Dealbook Conference’ hosted by The New York Times (NYT) that “Bitcoin is an extremely inefficient and highly speculative asset.”
“There are important questions about the legitimacy and stability of Bitcoin,” said Yellen. “I don’t think Bitcoin will be widely used as a trading mechanism.” “Bitcoin is an extremely inefficient means to conduct transactions,” he explained, “because of the amount of energy it consumes.”
In order to mine Bitcoin, users have to solve complex mathematical equations using a high-end computer. A lot of electricity is inevitably consumed because a high specification super computer is used for mining. It is known that the amount of electricity used to mine Bitcoin is similar to the annual consumption of New Zealand.
In addition to the high power consumption, there are concerns that it is used for illegal activities because it is difficult to track transactions. Regulatory authorities in each country are concerned that bitcoin could be used for terrorist financing, including drug trafficking through the darknet. Investor damage caused by extreme price volatility is also cited as a factor of concern.
“People need to know that Bitcoin is a very speculative asset and extremely volatile,” said Yellen. “We are concerned about the potential losses that investors may suffer.”
Fed digital currency shows expectations
On this day, Minister Yellen showed expectations for its own digital currency being prepared by the Federal Reserve System (Fed), the US central bank.
The U.S. Federal Reserve System (Fed) is conducting various research and experiments through its internal research institute’TechLab’ to enhance understanding of the opportunities and risks of issuing central bank digital currency (CBDC). It has been building and experimenting with the Massachusetts Institute of Technology (MIT) for many years. It is also working with central banks abroad.
“Digital currency may be able to implement faster and more efficient payment services,” said Minister Yellen. “It is a matter that requires policy efforts such as proactive research and investor protection devices. “In the short term, the Fed-led digital dollar research is meaningful,” he added. “I think it could be a faster, safer, and cheaper payment method.”
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Bitcoin’shakes’ in Janet Yellen remarks
From the past, Janet Yellen has shown skepticism about cryptocurrencies such as Bitcoin. In 2018, he said, “there are very few transactions processed with bitcoin” and that “many of the transactions that actually take place are illegal.”
On February 18, 2021, he appeared on CNBC Broadcasting Closing Bell, saying, “Bitcoin is a very speculative asset and has shown high levels of volatility over the past few years.” On the day, Minister Yelan emphasized the importance of ensuring that bitcoin is not used as an illegal means of trading and has measures to protect investors.
On the other hand, in the long run, some argue that Janet Yellen, who is skeptical of Bitcoin, will be a strong ally for Bitcoin.
This is because Janet Yellen’s dove-like tendencies (quantitative easing for growth and interest rate cuts) can lead to high inflation rates, creating an environment in which Bitcoin can be more noticed as an alternative asset. Minister Yellen is famous for emphasizing the role of the active government in the market and placing emphasis on solving the unemployment rate rather than stabilizing prices.
Anthony Pompliano, co-founder of Morgan Creek Digital Assets, said, “Yelon opposed austerity because he believed the US economy could absorb the shock even if the bubble bursts.” It has been a strong stimulus for inflation,” he said.
The price of bitcoin is showing a sharp decline in the short term due to Minister Yelan’s subsequent negative comments on bitcoin. At one time on the afternoon of the 22nd, just after the remark, Bitcoin plunged to $49,651, down 16% from the previous day.
As of 2:09 on the 23rd, according to the Token Post Market, Bitcoin is trading at 5575 dollars, down 9.78% from the previous day.
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