Is bitcoin a viable medium of exchange? Apparently, Vítor Constâncio, vice president of the European Central Bank (ECB), doesn’t think so. On September 22, 2017, while speaking on a panel at the European Systemic Risk Board conference in Frankfurt, the Portuguese economist declared that bitcoin is “certainly not a currency.”
According to Bloomberg, Constâncio even poked a bit of fun in his remarks saying, “I’m surrounded by two Dutch nationals so I can say that bitcoin is a sort of tulip. It’s indeed an instrument of speculation for those that want to bet on something that can go up and down 50 or 40 percent in a few days.”
“We don’t see it as a threat to central banking or monetary policy, that’s for sure,” he added.
Constâncio’s attitude toward bitcoin mirrors that of many prominent investors and financial institutions. Other figures, including JPMorgan CEO Jamie Dimon, have been even harsher in their analyses. Nonetheless, the general consensus seems to be that bitcoin – and many other cryptocurrencies – are in a bubble, though that “bubble” seems to pop almost daily.
The president of the ECB, Mario Draghi, recently addressed the prospect of national cryptocurrencies, a frequently discussed alternative to cold hard cash. When asked about the potential creation of an Estonian cryptocurrency, Draghi shot down the proposal, saying that “no member state can introduce its own currency.” To Draghi, it would be unacceptable for a eurozone nation to generate any currency – digital or tangible.
Constâncio’s remarks today rehashed the common comparison between the cryptocurrency market and the “Tulip Mania” of 17th century Holland. Even as financial leaders scoff at the skyrocketing valuations of cryptocurrencies, they remain interested in the development of the underlying technology. In May 2017, Draghi himself encouraged additional study of distributed ledger technology.