Bitcoin looks like bubble, NZ central banker warns

High demand: A man walks past a bitcoin ATM in Vilnius, Lithuania. Bitcoin has soared more than 1,500 this year. — Reuters

Spencer: It is too unstable to be useful in the future

WELLINGTON: Bitcoin’s spectacular gains look like a speculative bubble and the cryptocurrency is too unstable to be useful in the future, New Zealand’s central banker said.

“It looks remarkably like a bubble forming to me,” Reserve Bank of New Zealand acting governor Grant Spencer said in interview with TVNZ broadcast.

“Over the centuries we’ve seen bubbles, and this appears to be a bit of a classic case. With a bubble, you never know how far it’s going to go before it comes down.”

Bitcoin has soared more than 1,500% this year, and about 85% in just the past two weeks, as people rush to buy the digital currency in the hope it will become a legitimate alternative to gold or traditional money.

Trading in bitcoin futures opens later yesterday, with the first major US exchange offering a product pegged to the wildly fluctuating unit of payment that has no backing from a government or a central bank.

Bitcoin, “mined” by computers performing complex calculations, surged to over US$16,000 last week, and all bitcoins in circulation are now worth more than New Zealand’s entire US$185bil economy.

Early investors include the Winklevoss twins, who played an early role in Facebook Inc’s formation. Cameron Winklevoss told Bloomberg last Friday he thought bitcoin’s gains had only just begun as it would come to be seen as an upgrade to gold.

“Bitcoin is to me very much like gold,” Spencer said. “It’s mined, it has a fixed quality and the price is very volatile.”

The RBNZ is doing research on demand for New Zealand’s dollar, known as the kiwi, and whether it would be feasible to at some stage replace it with a digital alternative, but Spencer said bitcoin isn’t a template for the future.

“I think digital currencies, cryptocurrencies, are a real and serious proposition for the future. I think they are part of the future, but not the sort that we see in bitcoin,” he said.

“I think a cryptocurrency that has a more stable value will be the sort of cryptocurrency that’s more useful for the future.” — Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Business , bitcoin


Next In Business News

Moody’s: Sustainable bonds issuance to top US$850bil
Public Mutual declares gross distributions of RM235m for 13 funds
Central banks go big on gold buying
Earnings bounce, bond-yield drop help keep party going for US stocks
Bitcoin rallies past key $40,000
PBOC: China will maintain prudent, flexible monetary policy
Bank Rakyat launches entrepreneur programme
CPO futures seen trading with upward bias next week
As scrutiny mounts, crypto exchange Binance to wind down derivatives in Europe
Oil price climbs, notches fourth monthly gain on growing demand

Stories You'll Enjoy