Bank of England's Mark Carney Declares Bitcoin has "Failed" as a Currency

By Tom Pritchard on at

Bitcoin has been lauded as many things, including some sort of ultra-libertarian monetary alternative to government regulated currencies. Despite people still singing praises of Bitcoin, and cryptocurrencies in general, the Bank of England's Mark Carney has declared Bitcoin has failed to meet its lofty ambition of being a real currency.

These words came at a private event at London's Regent's University, where Carney told students that Bitcoin has so-far failed to meet two important criteria of functioning like a real currency.

"It has pretty much failed thus far on... the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange."

The value aspect is pretty obvious. Store of value means you can invest your money safe in the knowledge that it isn't likely to experience massive fluctuations in value. Bitcoin's value has been all over the place in recent months, leading many to express concerns about its volatility. To the point where criminals, who had loved the more anonymous method of transferring money, were ditching Bitcoin in favour of other cryptocurrencies.

That's likely down to the fact people have started treating Bitcoin like traded stock, buying and selling to take advantage of fluctuations in its price. That's not the kind of thing you can really do with regular currencies, not on a small scale.

Medium of exchange is a term used for what people buy and sell products of services with, which you can do with Bitcoin. It's become a lot harder recently, thanks to the value fluctuations, but some companies and retailers still do. That said, the majority of them do not, and the fluctuations mean some retailers (Valve/Steam come to mind) have stopped accepting Bitcoin in favour of more stable forms of currency. You certainly couldn't use Bitcoin to pay your rent, bills, or council tax.

But it's not all bad. Carney said that the underlying technology behind cryptocurrencies could be useful for decentralised verification and authorisation of financial transactions. Maybe you've heard of it under the name Blockchain, a system that's also been on the receiving end of some pretty grand claims. The difference being that the technology itself can be applied to a variety of things in multiple industries, and not just restricted to the financial sector. [TechRadar]

Image: Bank of England/Flickr

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