The president of the Federal Reserve Bank of Minneapolis is reportedly saying that Bitcoin (BTC) has no legitimate use case and may be putting investors at risk.
Neel Kashkari, president and CEO of the bank, says BTC is a consumer security risk rather than a financial stability risk.
In a LinkedIn live conversationKashkari says those investing in the top crypto assets by market capitalization are doing so without knowing what they are investing in.
He compares the crypto king to Beanie Babies – a line of stuffed animals that were once extremely popular among children – and says BTC’s market capitalization could drop to zero.
“[Bitcoin has] no actual use in the economy other than being a fun toy that some people like to own and trade.”
According to Kashkari, people also use BTC to “undermine banking regulations, to circumvent marijuana banking, or to… [conduct] illegal activities.”
Kashakri also says people should be wary when comparing Bitcoin’s success to retail giant Amazon.
“The ‘Bitcoin bros’ would say… in 1994 no one ever bought a book online, so [someone could say] Amazon has no future. This isn’t Amazon in 1994.
This is Amazon in 2004. Bitcoin has been around for over a decade, and over a decade later there is still no legitimate use case in an advanced democracy.”
In 2004, Amazon was valued at about $2.00 per share. Today that price stands at $185.
Bitcoin proponents say BTC is essentially digital gold – a provably scarce, secure and global asset that can be transferred around the world in minutes for a nominal fee.
This scarcity has led to increased adoption of Bitcoin in some countries such as Argentina, where Bloomberg reports that people are buying and holding the asset as a store of value against rampant inflation.
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Shutterstock/Konstantin Faraktinov