On October 16, 2017, Brazilian central bank president Ilan Goldfajn strongly rebuked bitcoin, according to local reports. He said, “Bitcoin is a financial asset with no ballast that people buy because they believe it will appreciate. That is a typical bubble or pyramid.”
An absence of government backing is one of the primary attributes of bitcoin, which largely derives value from its decentralized nature. Without government regulation or policy to intervene, bitcoin has frequently been accused of facilitating money laundering and tax evasion. Over the last three months, the value of bitcoin has fluctuated wildly while climbing from approximately $2,100 in July 2017 to approximately $5,800 in October 2017. This is a three-month gain of about 175 percent.
The massive spike in value gives pause to Goldfajn, who said, “The central bank is not interested in bubbles or illicit payments.” This “is not something the [Brazilian] central bank would like to encourage,” he added.
Nonetheless, Goldfajn indicated that technological innovation can be separated from volatile, non-fiat cryptocurrency. Brazil’s central bank cannot be accused of ignoring the value of distributed ledger technology. In August 2017, Banco Central do Brasil published the results of a real-time gross settlement system study, which examined prototypes of blockchain platforms, including the Ethereum-based BlockApps and JP Morgan’s permissioned implementation of Ethereum called Quorum.