Former Fed Chair: Bitcoin’s Main Use Case Is ‘To Do Ransomware or Something Like That’

Former Fed Chair: Bitcoin’s Main Use Case Is ‘To Do Ransomware or Something Like That’

In a recent interview, Dr. Ben S. Bernanke who is “a distinguished senior fellow with the Economic Studies program at the Brookings Institution,” shared his view on cryptocurrencies.

According to his Brookings bio,between February 2006 and January 2014, Dr Bernanke was “chairman of the Board of Governors of the Federal Reserve System, having been appointed to that position by both Presidents Bush and Obama.” Before this position, he was “chairman of the President’s Council of Economic Advisers, from June 2005 to January 2006.” And he was “a member of the Board of Governors of the Federal Reserve System from 2002 to 2005.”

Bernanke made his comments on May 16 during an interview on CNBC’s “Squawk Box”.

He told CNBC anchor Andrew Ross Sorkin:

Bitcoin and other cryptocurrencies whose value changes minute to minute, they’ve been successful as a speculative asset — and people are seeing the downside of that right now — but they were intended to be a substitute for fiat money, and I think, in that respect, they have not succeeded because if Bitcoin were a substitute for fiat money, you could use Bitcoin to go buy your groceries. Nobody buys groceries with Bitcoin because it’s too expensive and too inconvenient to do that.

Moreover, the price of groceries, the price of celery, varies radically day-to-day in terms of Bitcoin, and so there is no stability either in the value of Bitcoin. The main use of Bitcoin is mostly for underground economy activities and often things that are illegal or illicit.

I don’t think that Bitcoin is going to take over as an alternative form of money. It’ll be around as long as people are believers and they want to speculate in this…

As I said, it’s a speculative asset… gold has underly use value — you can use it to fill cavities. The underlying use value of a Bitcoin is to do ransomware or something like that. One of the other risks that Bitcoin has is that it could at some point be subject to a lot more regulation. And the anonymity is also at risk, I think, at some point. So, you know, investors in Bitcoin should be aware of that.

Bernanke has long been skeptical of digital assets, writing in a letter to the Homeland Security committee as far back as 2013 that virtual currencies could pose risks to law enforcement. 

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The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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