From Warren Buffett to Jamie Dimon, many have voiced their concerns over cryptocurrencies.
Last week, International Monetary Fund managing director Christine Lagarde, reiterated her concerns over cryptocurrencies and their potential use for illegal and criminal activities.
In a long post on March 13 to the IMFBlog, she reiterated her concerns over cryptocurrencies and their potential use for illegal and criminal activities.
Her other worry, given her central banking background, is how cryptocurrencies can affect financial stability.
She has spoken before of the inevitability of regulation for cryptocurrencies. To be fair, in the recent post, she also spoke of the potential of blockchain technology in changing the world positively.
But her answer, in the recent write up, to the dangers posed, is to “fight fire with fire” by using the same innovations behind cryptocurrencies.
“Regulatory technology and supervisory technology can help shut criminals out of the crypto world,” Lagarde says, adding that crypto exchanges in some countries were already subject to know-your-customer requirements.
She says distributed ledger technology can be used to make online transactions safer through speeding up the information-sharing process between market participants and regulators.
She suggests biometrics, artificial intelligence, and cryptography can also be deployed to enhance digital security and identify suspicious transactions.
While Lagarde prefers to regulate, those more concerned about its value as an investment also have their doubts.
Investment guru Warren Buffett didn’t mince his words about what he thinks of cryptocurrencies.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” he said in a Jan 10 interview with CNBC.
He said in the same interview that he will never take a short position on bitcoin futures. “We don’t own any, we’re not short any, we’ll never have a position in them,” he said.
More recently, Allianz Global Investors GmbH’s global economics and strategy head Stefan Hofrichter says in a web post that bitcoin is worthless.
“In our view, its intrinsic value must be zero,” he says, pointing out that a bitcoin is a claim on nobody in contrast to sovereign bonds, equities or fiat money.
Hofrichter says it’s only a matter of time before the bitcoin bubble popped.