RBA Chief Says Bitcoin Looks Attractive For Criminals, Speculators

RBA head Philip Lowe has expressed concerns over Bitcoin, saying it seems to appeal to speculators and those involved in illegal activities. On the other hand, he thinks a blockchain-based eAUD is feasible, and Australia’s central bank might even issue such a cryptocurrency.

Philip Lowe, governor of the Reserve Bank of Australia (RBA), said on Wednesday the Bitcoin hype seemed like a “speculative mania.” Speaking at the Australian Payment Summit in Sydney, Lowe stated that Bitcoin was mostly used by speculators and criminals rather than being embraced for everyday transactions. However, he agreed that there could be a blockchain-based digital Australian dollar. 

Bitcoin is fluctuating close to its record high of $17,000, gaining an impressive 1,600% year-to-date. Investors expect to see Chicago-based CME Group launch Bitcoin futures on December 18. Elsewhere, people can already trade BTC futures on the exchange provided by Cboe Global Market.  

Despite the incredible price surge, Lowe remains skeptical about the cryptocurrency’s true functionality:

“When thought of purely as a payment instrument, it seems more likely to be attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions.”

He also listed multiple issues related to the largest cryptocurrency:

“The value of bitcoin is very volatile, the number of payments that can currently be handled is very low, there are governance problems, the transaction cost involved in making a payment with bitcoin is very high and the estimates of the electricity used in the process of mining the coins are staggering.”

At the end of October, RBA official Tony Richards said that the institution was closely watching cryptocurrencies, including Bitcoin, but he did not express any concerns at the time.  

Speaking of the blockchain, the engine behind Bitcoin and most other cryptocurrencies, both Lowe and Richards agree that it is a disruptive technology. 

The RBA chief is also positive about a digital version of the Australian dollar, saying the eAUD could result in more effective, affordable, and transparent payments. 

The bank is open to issuing digital AUDs but not in the near future. 

Lowe’s negative comments about Bitcoin came several days after his counterpart in New Zealand, Grant Spencer, voiced similar concerns, saying that the cryptocurrency seems to be a “classic case” of a bubble.