Bitcoin bubble can last 1,000 years: former president of the Central Bank of Chile

Key facts

:

  • Bitcoin would not enter the financial system without further regulation, according to De Gregorio.

  • The researcher supports the digitization of payments, although he is skeptical of BTC.

“The drama that bitcoin has is that, for it to be more successful, and for it to have more acceptance, anonymity has to lose it in a certain dimension.” So believes José De Gregorio, former president of the Central Bank of Chile. For the economist, the first cryptocurrency is a bubble that could last 1,000 years, but it could also go to a price of zero dollars.

One of the questions of the now dean of the Faculty of Economics and Business at the University of Chile is that, percentage-wise, Bitcoin

still does not reflect a high number of transactions. The academic’s criticism is that the crypto-asset is already more than 12 years old and accounts for less than 1% of the total number of monetary transactions carried out on a global scale.

De Gregorio went further by suggesting that the dollar or the euro, national currencies with which the BTC quote is recorded, would be the fundamental currencies behind bitcoin. The dean’s view is that so-called blockchain technology, digitization of payments and central bank digital currencies (CBDCs)

have breakthroughs and greater potential.

“We economists are deeply skeptical. We can transact with bitcoin, but the fundamental currency behind it is something else. A currency is something that serves three functions: store of value, unit of account and means of payment,” explained

De Gregorio during his intervention in the “Connected with Chile” series of talks organized by the exchange Buda.com. Bitcoin bubble can last 1,000 years: former president of the Central Bank of Chile Bitcoin bubble can last 1,000 years: former president of the Central Bank of Chile The talk with José De Gregorio (right) was moderated by Guillermo Torrealba, CEO of Buda.com. Source: Capture / YouTube.

The fact that the global digitalization of payments is minimizing the fees for sending and receiving funds is something that the executive valued. However, he did not relate this fact directly to cryptocurrencies, but to the technological advances of fintechs

and banks themselves.

Possible financial crimes with bitcoin

The main concern of the academic is that bitcoin and cryptocurrencies in general have a “huge capacity for tax evasion”. He considers this aspect as “unresolved” and that it is still an unresolved task in the U.S. and Europe.

niverse of digital assets.

The aspect of possible tax evasion was not the only one mentioned by De Gregorio. He also questioned the fact that it is not guaranteed that the technology is not used for money laundering or terrorist financing. On these points, he said that if the origin of the funds is not validated, then bitcoin would not enter the international financial system.

Like his fellow economists on a global scale, the interviewee reiterated that bitcoin has no intrinsic value, but paradoxically he compared it to gold because of the issue of digital scarcity. “I like to say it’s similar to gold because people know and trust that it’s going to have that value,” stressed the researcher who sees BTC as an asset, but not as money or a means of payment.

In a previous edition of “Conectados con Chile”, former senator Felipe Harboe explained that banks were unfairly criminalizing cryptocurrencies. For the politician, financial institutions only seek to defend their business models and act as intermediaries, as reported in July by CriptoNoticias.