Explosive warning from the Bank of England to crypto holders: “Be prepared to lose all your money”

The Governor of the Central Bank of England Andrew Bailey has issued a warning in recent hours that has alerted cryptocurrency investors. “Buy them only if you are prepared to waste all your money.”said the country’s most important monetary policy official.

Bailey has expressed opposition to the term ‘cryptocurrency’, but believes that they should be called “crypto assets”. And he repeated one of the arguments often used by those who oppose these types of assets because they have no “real” value and are not issued by a central bank. “I would only emphasize what I have said several times in recent years, I am afraid they have no intrinsic value,” he commented.

“Sorry, I say it bluntly: only buy them if you’re willing to waste all your money.” (Bailey)

“Sorry, I say it bluntly: buy them only if you’re willing to waste all your money.”Bailey concluded. This is not the first time that an expert has warned of the possibilities of the cryptocurrency bubble bursting.

The billionaire Warren Buffett has been heavily critical of Bitcoin in recent years, repeatedly dismissing the cryptocurrency as worthless and as a risky and speculative asset, according to an article by Business intern.

“Cryptocurrencies are fundamentally worthless and produce nothing. They don’t reproduce, they can’t send you a check, they can’t do anything, and what you’re hoping is someone else will come and pay you more money for them later, but then this person has the problem. In terms of value: zero, ”asks Buffett.

“He is ingenious and the blockchain This is important, but Bitcoin does not have a unique value, it does not produce anything. You can watch it all day and no little bitcoins are coming in or anything like that.. It is essentially an illusion, ”he concluded.

Cryptocurrencies are basically worthless and don’t produce anything. They don’t reproduce, they can’t send you a check, they can’t do anything, and what you’re hoping for is someone else to come and pay you more money for them later. (Buffett)

Recently the economist Nouriel Roubini, famous for his forecast of the global financial crisis of 2008 and 2009, also criticized crypto-waves. “To refer to bitcoin or other cryptocurrencies as ‘money’ is inappropriate. They are not a unit of account: virtually nothing is priceless. These are not scalable means of payment: with Bitcoin you can make five transactions per second while the Visa network makes 24,000“, He assured.

“They are not even named in a consistent way that allows users to compare the relative prices of products,” Roubini asked. “The Flintstones had a more sophisticated monetary system based on a benchmark: cartoon cavemen used seashells, ”he quipped.

Are cryptocurrencies issued by central banks coming?

Critics of some cryptocurrency economists and academics mostly refer to currencies such as bitcoin, etherum, or dogecoin, which are not backed by any traditional financial institution. The novelty is that central banks are also interested in issuing digital currency. The Economist recently suggested that there are central entities that could issue “govcoins”, that is to say, cryptos produced directly by the States.

According to the English magazine, a change in these characteristics would be disruptive, because these currencies (digital version of those already existing in the respective countries, or official alternatives) would allow people to deposit their money directly with central banks, avoiding intermediaries and usual sources of credit, such as banks and financial companies.

In this regard, in a recent zoom on cryptocurrencies, Walter Pimenta, Senior Vice President of Products and Innovation for Latin America at Mastercard, pointed out that with the development of e-commerce and the advancement of “digital inclusion”, both spurred by the pandemic, there was an acceleration in Argentina’s “Contactless payment technologies” and a much better knowledge of digital currencies.

The Economist recently suggested that there are central entities that could issue “govcoins,” that is, cryptos produced directly by states.

Pimenta clarified that There are 66 central banks around the world working at different stages of digital currencies development, i.e. in a digital representation of your own currency. Central bank currencies, Pimenta said, would be more reliable because they are born linked to three basic principles on which a system of means of payment is based: stability, regulation and consumer protection.

A second type of cryptocurrency is Stable coins, such as UFDC, issued not by central banks, but by market participants, which base their stability on the fact that they maintain a reserve on certain assets, like the dollar, against the issue, and because their provision is centralized, but in private hands.

The third type of cryptocurrency, such as Bitcoin or Ethereum are “free floating”, which gives them high volatility and removes their possibilities as a means of payment, because it is more of a speculative asset.. The world of these cryptocurrencies, Pimenta said, has significant regulatory challenges to resolve, which is not easy, as they are managed in a decentralized manner. In short, they are “investment” (and speculation) currencies but not transaction currencies.

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