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Former Fed Chairman Says Bitcoin Is For Criminals; Is Unsuccessful As An Alternative Money

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According to the former chairman of the U.S. Federal Reserve, Ben Bernanke, cryptocurrencies, including Bitcoin, can never be successful as an alternative money. He believes that the prices are too volatile to function as a practical means of exchange and lack the underlying use cases to act as stores of value. 

Bernanke said in a recent interview that digital assets have proved to be a “speculative asset.” However, they failed to meet the expectations as substitutes for fiat currency.

He made the argument that if Bitcoin were a substitute for fiat money, it could be used for buying groceries. He goes on to say that nobody can use Bitcoin to buy groceries since it’s too expensive and too inconvenient to do that. 

In addition, the price of groceries regularly fluctuates against Bitcoin, which again is a hindrance to the adoption of it as a medium of exchange. Over the past seven weeks, the price of Bitcoin has witnessed major volatility, shattering an all-time record for its longest weekly bearish trend on Monday. 

Bernanke thinks that the “main use” of Bitcoin is within underground economies for aiding illegal activity. 

On-chain data has been unsuccessful in collaborating on this. The illegal activity is a smaller share of Bitcoin trading activity over time, reveals the latest crypto crime report of Chainalysis. 

The treasury department has acknowledged that fiat remains to be a go-to currency for criminals instead of crypto

Bernanke also does not agree with the comparison of Bitcoin to “digital gold.” 

The CEO explained that Gold has an underlying use-value that people use for filling cavities. He believes that the underlying use-value of Bitcoin is in things such as ransomware.    

Bernanke forecasted that the current U.S. inflation- which is at its highest level in 40 years, will descend without direct interference from the Federal Reserve with time as the issues of the supply chain continue to regain. There are high chances of nationwide recession if the Fed is pushed to continue strengthening interest rates. 

This month, the Fed increased rates by 50 basis points. Such a rise is the first in 22 years. Only days later, the market responded negatively, including Bitcoin, which since then has traded near $30,000.

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