THE NEUTRAL ZONE
Bitcoin surpassed $50,000 on Tuesday, a doubling in value in less than two months. The cryptocurrency’s rapid rise in price stemmed from heightened demand that could signal wider acceptance and a growing recognition of the new currency as a true asset.
Interest in the digital currency also grew following Tesla’s $1.5 billion purchase of bitcoin last week, accompanied by plans to accept it as payment for Tesla products. Shortly after, Mastercard announced that cardholders will be able to make some transactions using cryptocurrencies, while banking giant BNY Mellon announced the creation of a new team that will build a platform to accept digital assets and cryptocurrencies.
Economists are split on the long-term viability of Bitcoin. Bank of America’s chief of investment strategies called the new currency the “mother of all bubbles,” arguing it is the result of increasingly speculative investor behavior. Others, including Twitter CEO Jack Dorsey and rapper Jay Z, are betting on its success. The pair invested 500 bitcoin – worth $23.6 million at the time of purchase – in an endowment fund with the hopes of making bitcoin “the internet’s currency” with initial development in India and Africa. In Miami, city officials are moving forward with a proposal to pay city workers in bitcoin and to accept it for fee and tax payments, a move they say could pay off in attracting new tech companies. Uber’s CEO said that while he “quickly dismissed” the idea of mimicking Tesla to purchase bitcoin with corporate cash, he said the company would consider accepting it as payment.
Still, regulatory hurdles remain before accepting bitcoin into mainstream finance. U.S. Treasury Secretary Janet Yellen has called the misuse of cryptocurrencies a “growing problem.”
“I see the promise of these new technologies, but I also see the reality,” Yellen said at a policy roundtable. “Cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”
Other federal regulators have echoed Yellen’s concerns, adding that clear regulation is urgently needed amid bitcoin’s rapid rise in popularity.
This section includes an aggregation of articles showing different viewpoints on the topic.
Explainer: Bitcoin’s mainstream charge raises stakes for central bank digital cash – Reuters – 2/15/2021
Central banks from the Group of Seven nations set out in October how a digital currency could function, though progress has been slow. The communique from last week’s G7 finance ministers’ meeting did not mention the nascent technology.
Bitcoin poses no threat to the dollar as the world’s currency leader, Fed’s Bullard says – CNBC – 2/16/2021
Bullard, who has led the St. Louis Fed since 2008, expressed concerns about widespread transactions using a range of cryptocurrencies that are not issued by governments. “Dollars can be traded electronically already, so I’m not sure that’s really the issue here. The issue is privately issued currency,” he said.
Don’t fall for the bitcoin bubble, even the Flintstones had a better system, warns economist Nouriel Roubini – MarketWatch – 2/13/2021
And don’t even refer to cryptocurrencies as “currencies,” as almost nothing is priced in them, he said. “They are not a scalable means of payment: with bitcoin you can do five transactions per second while the Visa network does 24,000.”
What Can You Actually Buy With Bitcoin? – The New York Times – 2/3/2021
Pornography, patio furniture and an at-home coronavirus test are among the odd assortment of goods and services people are purchasing with the cryptocurrency.
This section includes an aggregation of tweets showing different viewpoints on the topic.