Bitcoin has long struggled to justify its price, now hovering around the $3,500 mark, as it battles against network issues, extreme volatility, and stalling usage.
The bitcoin price fell steadily throughout last year, after rocketing to near $20,000 per bitcoin at the end of 2017, as many of the sky-high expectations for the burgeoning sector failed to materialize as quickly as many had hoped.
Now, Huw van Steenis, senior adviser to Bank of England (BoE) governor Mark Carney, has warned bitcoin, as well as other major cryptocurrencies, “fail the basic tests of financial services.”
The bitcoin price has fallen sharply over the last 12 months as investors await moves on regulation and long-expected investment from the traditional financial services industry.Getty
“I’m not so worried about cryptocurrencies,” Van Steenis told Bloomberg Television in an interview from Davos. “[Bitcoin and cryptocurrencies] fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”
Bitcoin, along with many of its peer cryptocurrencies, has attracted criticism in the past for same issues Van Steenis highlighted. Last year, Carney warned bitcoin could be heading for a “pretty brutal reckoning,” saying cryptocurrencies have “all the hallmarks of a bubble.”
While there are attempts underway to speed up bitcoin’s ability to act as a medium of exchange, either online or in person, they are still in the early stages.
Bitcoin’s lightning network, which has continued to grow over the last year despite the bitcoin bear market, is one such scheme and works by adding a second layer over the top of the bitcoin blockchain, allowing users to carry out near instant, secure transactions “off-chain” to free up capacity.
Despite warnings from traditional bankers and the international banking community, others are still confident bitcoin will eventually return to its all-time high price.
Bitcoin investors are nursing a hangover since 2017’s epic bull run sent the price to almost $20,000 per coin.CoinDesk
An executive at bitcoin wallet provider and exchange Coinbase has predicted this year will mean big changes for bitcoin regulation around the world, while one of the world’s richest people, Hong Kong billionaire Li Ka-shing, has thrown his weight behind the nascent technology.
The Winklevoss twins of Facebook founding fame who went on to found the Gemini bitcoin exchange said bitcoin is “better at being gold than gold,” and think that “over time the market cap of bitcoin will surpass that of gold.”