Economy
Yellen Warns That Bitcoin Is Extremely Inefficient
Treasury Secretary Janet Yellen said that Bitcoin is extremely inefficient as a way to conduct transitions. She issued a warning Monday about the dangers that bitcoin poses both to investors and the public.
RELATED: Bitcoin’s Value Dropped 20% As Investors Sold Off
Trading Above $50,000
Despite a recent slide, Bitcoin continues to trade above $53,000 as it received boosts from multiple sources. EV maker Tesla recently made a substantial $1.5 billion investment and started accepting bitcoin for transactions.
Beginning late last year, Bitcoin began climbing like crazy. Then, it traded less than $20,000 by December 15 and climbed to $29,388 by January 1. The cryptocurrency breached the $40,000 barrier by February 8. It peaked at $57,489.10 earlier this week on February 21.
Bitcoin Is Extremely Inefficient
However, the Treasury Secretary said that there are important questions about legitimacy and stability. Yellen, who talked to CNBC’s Andrew Ross Sorkin, said she doesn’t think Bitcoin is widely used as a transaction mechanism. “To the extent, it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering,” she said.
Acquiring actual bitcoin requires mining, where high-powered computers solve complex equations. According to Digiconomist, the energy requirements are sizable, and bitcoin mining generates an annual carbon footprint equal to what New Zealand generates.
Bitcoin’s Volatility
Another reason why Bitcoin is extremely inefficient is its volatility. The cryptocurrency’s price fluctuated wildly since last year, with sudden highs and drops at any given time. “It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” Yellen added.
In addition, bitcoin earned a reputation as the currency of choice among shady personalities. Given, it's difficult to trace, many illegal and suspect transactions use bitcoin for settling payments.
It’s Still Trading HIgh
Despite Yellen’s concerns, bitcoin continues its wild climb towards $60,000. Regulatory concerns surrounding the cryptocurrency likely won’t derail its present momentum. “The regulatory issues have been around for a long time, we’ve been dispelling them for a long time. At this point, our belief is: Bitcoin is not a question of if, but when,” said Meltem Demirors, chief strategy officer of CoinShares. “We certainly believe, you know, the best time to invest in bitcoin was yesterday — the second-best time to allocate is today,” she added.
Demirors’ comments came after bitcoin hit $1 trillion in market value last week. It’s been on a tear since the start of 2021, rising by more than 90% so far this year. Those strong gains came from increased interest in bitcoin by mainstream companies such as Tesla and the Bank of New York Mellon.
Failed Currency
NYU Stern School of Business Aswath Damodaran remains skeptical about investing in bitcoin. While he admits that the cryptocurrency is an “incredible show to watch,“ he said it’s definitely not an investment. He said that bitcoin remains a speculative game and a horrifically bad currency. “It’s not an asset class. It’s a failed currency, at least into this moment. Let’s see whether they can fix it,” Damodaran said. However, he doesn’t see any further action. “I don’t think that they have an incentive to do so,” he added.
Instead, various government agencies proposed making an alternate digital currency. This can help open up global payments to those without access to one. The Federal Reserve studied the issue and recognized the feasibility of a new digital currency along with a payments system. However, it will take a few years to roll out a system. “I think it could result in faster, safer, and cheaper payments, which I think are important goals,” Yellen said.
Watch the Yahoo Finance news video reporting how Bitcoin dropped Elon Musk and Janet Yellen tweets:
Loading ...Do you agree that Bitcoin is extremely inefficient in handling transactions? Can BItcoin sustain its massive run? Let us know what you think about investing in Bitcoin. Share your thoughts in the comments section below.
9 Comments
I wouldn’t invest in anything that’s computer generated through the internet it’s just another way for hackers to steal your money faster and easier. This whole Bitcoin shit is for the birds why try and change something that’s been working for hundreds of years or more. What’s going to happen when you need extra money for doing a job for someone else that you don’t work for an they pay you cash now what your screwed leave well enough alone bitcoins are for Africa but not for America plane and simple
I like sticking to cash ,everything else is a communist plot to ruin the US
Guess what morons, I like cash too BUT they are gonna get rid of it! Yellen said that crap because they are gonna roll out their own digital and want to get Bitcoin out of the way! Isn’t going to work!
At least two of the comments come from people who never bothered to do the most elementary research on Bitcoin. May I recommend: https://99bitcoins.com/ as a place to start.
Janet Yellen is a member of the Political Class. She knows that fiat currencies are inherently worthless. And she is trying this pathetic attempt to shore them up.
Stick with cash if you think that will work! I’ll watch for you wheeling the wheelbarrow full of “cash” to the local farmer’s market just to buy a loaf of bread. Message me when you hear Acting President Harris promoting “One world, one State, one Leader!”
Bitcoin is flawed. I used to mine it and I offered it as a form of payment in my business for years. Not one customer ever paid by Bitcoin. The only use I ever found for it was paying for a server, but transaction costs got too high to make that worthwhile. Even mining was a money loser with the price of Bitcoin constantly dropping and electricity costs rising. I got out. I missed the speculative surge in Bitcoin pricing, but it’s all puffery. The price will crash and a lot of people will lose.
I use bitcoin and it’s good when I can’t wire my own Husband money with out them calling it a scam now a days lots of people are crazy just leave it alone I also save money by using it and I ID is registered with bitcoin as well.as my address and my phone everything in ilegal
The US dollar is quickly becoming an electronic currency. The private company known as the Federal Reserve Bank has been the leader in “cryptocurrency” since we broke with the gold standard in the 70’s. They have been slapping electronic zeros on the debt, selling junk bonds, and artificially inflating the currency for about 50 years. As they officially faze out paper money it will be nothing but a cryptocurrency. Yellen is just talking down the competition of her former employer.
Yellen is gaslighting. Bitcoin scares the elites. It makes it harder for them to roll out their NWO agenda to steal our wealth and liberty.
BTC is here to stay. I agree with MUNNSTER, Yellen is gaslighting. The Feds want a centralized crytpocurrency and are going to come out with one. They might even try to make it illegal to have BTC as many other governments have but can not control it. More and more merchants and suppliers are accepting BTC. All you naysayers are getting left behind.