Subscribe to our newsletter

RBA derides ‘speculative mania’ of bitcoin

RBA derides ‘speculative mania’ of bitcoin

Tim Stewart
— 1 minute read

Bitcoin is unlikely to ever become a legitimate currency due to its poor governance, high transaction costs and extremely volatile price, says RBA governor Philip Lowe.

Speaking at the Australian Payment Summit yesterday, RBA governor Philip Lowe said it is hard to see "so-called crytopcurrencies" ever being commonly used for everyday payments.

Mr Lowe said the "current fascination" with cryptocurrencies, which has seen the price of bitcoin surge from US$950 in January 2017 to US$16,803 at the time of writing yesterday (an increase of almost 1,700 per cent), feels like "speculative mania" rather than an endorsement of bitcoin as a practical currency.

Advertisement
Advertisement

"The value of bitcoin is very volatile, the number of payments that can currently be handled is very low, there are governance problems, the transaction cost involved in making a payment with bitcoin is very high and the estimates of the electricity used in the process of mining the coins are staggering," Mr Lowe said.

"When thought of purely as a payment instrument, it seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions.

"So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment."

He did not rule out the eventual emergence of an "efficient and low-cost" electronic payment in the future.

However, in the understated language of a central banker, he said, "There is a certain attraction of being able to make payments from funds held in prudentially regulated accounts that can earn interest."

 

 

RBA derides ‘speculative mania’ of bitcoin
Philip Lowe, RBA, bitcoin
ID logo

related articles

  • UK fintech launches in Aus

    UK neobank Revolut has rolled out its beta launch in Australia with around 20,000 consumers on the waitlist to try out the fintech. ...

  • Cashwerkz added to Agility Connect

    Cashwerkz has been integrated with Agility Applications’ Connect solution, making the investment platform now available to 175 financial s...

  • Fintech start-up completes $10m raise

    Australian payment start-up Verrency has closed a $10 million funding round, bringing total investment in the company to more than $20 milli...

promoted stories

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.