A member of the Swiss National Bank Governing Board (SNB) has argued that cryptocurrencies aren’t in any competition with traditional fiat currencies.
Andrea Maechler added, however, that private-sector digital currencies were better and less risky compared to a version offered by a central bank, reports Reuters.
During an event in Zurich, Maechler said:
Digital central bank money for the general public is not necessary to ensure an efficient system for cashless retail payments. It would deliver scarcely any advantages, but would give rise to incalculable risks with regard to financial stability by calling into question the tried-and-tested two-tier system.
As Switzerland’s central bank, the SNB performs the role of a bank to commercial banks, which in turn deals with end customers, according to the report.
According to Maechler, the hype around cryptocurrencies had been built up to such an extent that they had far outweighed their actual use. She added that money must be a stable unit of account and a viable medium of exchange to be used for goods and services. Not only that, but it should be used as a long-term store of value, such as with savings.
In her opinion, though, digital currencies such as bitcoin don’t meet these requirements. Since the beginning of the year, the cryptocurrency market has experienced fluctuating prices. Bitcoin, which was trading within touching distance of $20,000 at the end of December, has undergone a dramatic price change amid various factors. At the time of publishing, it is trading at $6,604, representing a near 3.5 percent drop in 24 hours, according to CoinMarketCap.
The rest of the market isn’t faring any better either. Ethereum, which was valued at more than $1,400 at the beginning of the year, is now down at $370, figures it hasn’t seen since November. Fifth-place litecoin, which was enjoy a price over $360 in December, is now valued at $113. With the first quarter representing the worst three months for bitcoin ever, it remains to be seen whether market prices can improve as they industry turns its attention to the second quarter.
Despite the volatility in prices, Jon Matonis, the co-founder of the Bitcoin Foundation, is of the opinion that bitcoin isn’t in a bubble. According to him, the bubble can be found in the global stock and bond markets that are being boosted by central banks.
Not only that, but confidence remains in where the price of bitcoin is heading. Tom Lee, the head of research at Fundstrat Global Advisors, believes that bitcoin will reach $91,000 by March 2020. He also thinks that cryptocurrencies will record highs later this year.