Bitcoin and Ethereum are Not Currencies, States Swedish Central Bank

Riksbank, the central bank in Sweden, has joined other monetary authorities to reject Bitcoin’s status of “currency”. It claims that cryptocurrencies lack the ability to serve three main roles of money and are more like assets.

The Litmus Test for Money

Riksbank explained that proper money should function as a store, medium, and account unit.

Money can store value which means that its purchasing power can be maintained or decreased at a negligible rate. It should also be immune to inflation, which is something even the US dollar is suffering from lately.

Many Bitcoin bulls promote the asset as an inflation hedge or value storage technology. This is due to its fixed supply, immunity to monetary debasement, and high price. In practice, however, Bitcoin and other cryptocurrencies do not work in this manner. As of late, crypto prices have been closely linked to stocks which tends to move at the Federal Reserve’s whim.

The bank explained that Bitcoin’s price has been volatile and was therefore a poor preserver.

Bitcoin is also less popular than fiat currency as an exchange medium, because so few merchants will accept Bitcoin payments. Coinmap estimates that there are approximately 29,500 Bitcoin ATMs worldwide, and 60 million merchants who accept Visa.

However, there is progress on this front. Strike, a Bitcoin payments company, has partnered with Shopify and NCR to bring Bitcoin payments to in-person merchants across the United States later in the year. In January, a Visa survey revealed that 25 percent of small merchants from 9 countries planned to incorporate crypto payments by 2022.

However, Bitcoin is not suitable as an account unit due to its volatility. Bitcoin was at $69,000 in November, but it dropped to $25,000 this month.

Products are priced mostly in US dollars even in El Salvador, the country that adopted Bitcoin as legal currency.

Central Bank Aversion to Bitcoin

The Bank of Canada also criticized Bitcoin’s potential to be an inflation hedge last month. Another country is suffering from record-high inflation. One of its political leaders suggested Bitcoin as a possible solution.

The Federal Reserve and the ECB all dismissed Bitcoin’s potential to be used as money. Prior has chosen to concentrate more attention on stablecoins to regulatory purposes – crypto assets with a value pegged to fiat currency.

Former Fed Chair Ben Bernanke revealed why he doesn’t believe Bitcoin will ever be a valuable store of value in a recent interview.

He explained that gold has an underlying value, and can be used to fill cavities. “The underlying value of Bitcoin is to runsomware or something similar.”

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the””  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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