Bitcoin is Not a Reliable Method of Payment says Bank of England

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Bank of England warns of Bitcoin
Bank of England warns of Bitcoin

Andrew Bailey the Governor of the Bank of England has raised a warning about the future of cryptocurrencies. In comments made on Monday, Bailey said that Bitcoin and other currencies can’t be a trustworthy method of payment due to their high volatility. 

“They fluctuate in value substantially,” he said during a virtual conference, reported by Bloomberg. “Which is why they’re, on the whole, not a good medium for making payments?”

Bailey’s comments came few days after El Salvador voted for allowing Bitcoin as a legal tender alongside the U.S. dollar. The Central American country is the first country ever to adopt digital tokens as a payment method.

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“Given the volatility of the asset value, and given the fact that there isn’t a real asset underpinning them, I’m afraid if you want to buy them then please understand that you can lose, you could lose all your money,” Bailey said.

Musk’s Tesla moves Bitcoin price up again

On Monday, Bitcoin blasted above $40,000 after the 2nd richest person in the world Elon Musk said that Tesla might re-accept Bitcoin as a payment method again. However, Musk made it clear that mining should start using cleaner energy before his company allows clients to buy electric cars in Bitcoin.

In mid-May, Musk caused Bitcoin to lose half of its value after Tesla (NASDAQ: TSLA) disallowed selling cars in Bitcoin. 

“We’re going to engage with users, the technology sector, to understand the potential for these things,” Bailey said. “And there’s a lot of work going on in the Bank of England to understand the implications of them for central banking.”

Nonetheless, Bailey’s comments aren’t the first of their kind. In May, he told journalists that cryptocurrencies have “no intrinsic value” and that crypto tokens can cause traders to lose all their money. 

“I’m afraid currency and crypto are two words that don’t go together for me,” he said.

The comments of the governor echoed the UK’s Financial Conduct Authority as well as European Central Bank president Christine Lagarde who called Bitcoin a “highly speculative asset which has conducted some funny business … and totally reprehensible money laundering activity.”

In conclusion, the Bank of England said this month that it might soon launch its own central bank digital currency!