22nd February wasn’t a good day for Bitcoin. For the first time in history, the cryptocurrency moved $10,000 in a single day and not in a good way. While Bitcoin was having a tough time, critics and bears started advocating against it. One such individual was Treasury Secretary Janet Yellen, who calls Bitcoin “extremely inefficient.” I don’t know what she meant by this, probably the fact that you can’t print Bitcoin like dollars to uplift the economy (PUN INTENDED).
Yellen calls Bitcoin “extremely inefficient,” But why?
At the time when Janet Yellen made the comments, Bitcoin was back above $53,000. But the insane fall from $58,000 to $46,000 was panicking and showed one thing: Bitcoin is still not stable enough. One of the major factors that stopped the cryptocurrency from being widely accepted is its volatility. This means if companies start accepting Bitcoin as a payment method, then a product that could be worth 1 Bitcoin now could be worth 2 Bitcoins now and 0.5 Bitcoin tomorrow.
Yellen took a plunge at these, trying to undermine the cryptocurrency. She asked questions about the legitimacy and stability of Bitcoin. Yellen also brought out the illegal transactions card, saying that Bitcoin is mostly used for illicit finance. She also said that transacting with Bitcoin is highly inefficient, and the amount of energy it consumes is staggering.
Bitcoin cannot be printed like dollars. Instead, it can be mined by solving complex mathematical equations. These equations are so complex that they need high-power machines for computation. And these machines consume a lot of energy. An estimate says that the mining of Bitcoin leaves an annual carbon footprint equal to the nation of New Zealand. Janet Yellen also talked about Bitcoin being a highly speculative asset and said she is worried about the losses investors might incur.
The most recent fall of cryptocurrency resulted in a lot of paranoia in the minds of investors. But it did recover back very quickly, and all this happened very fast. The fact that Bitcoin is gaining mass acceptance, we should understand that the government and many officials are trying to promote its own regulated digital currency. But the point of having a regulated cryptocurrency totally voids the point of having one. If all governments of different nations promote their own digital coin that is regulated by them, then it will be the same as cash. The point here is having a decentralized currency that is free from any manipulation or corruption.
Even in India, the government is talking about making its own digital coin and regulating it. Even though regulating has its benefits like security and stopping illegal transactions, but in general, it will lose its importance of being a hedge to inflation.
What are your thoughts on the comments made by Janet Yellen? And does her points really make any sense? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.