Bitcoin is Riding a “Speculative Mania”, Says Australia’s Central Bank Chief

The global fascination with bitcoin “feels like a speculative mania”, the governor of Australia’s central bank said on Wednesday.

As bitcoin hit a record-setting new high on Tuesday to break through $17,500 fueled by the debut of bitcoin futures trading on Chicago-based CBOE, the head of Australia’s central bank raised questions on the cryptocurrency’s function as a currency for payments.

Reserve Bank of Australia (RAB) governor Philip Lowe was speaking today at this year’s Australian Payment Summit in a speech titled “An eAUD?” when he touched on the subject of cryptocurrencies and, specifically, bitcoin. “[I]n reality, these currencies are not being commonly used for everyday payments and, as things currently stand, it is hard to see that changing,” Lowe said.

The official specifically pointed to bitcoin’s volatility in its value, transaction capacity and costs, governance problems and “staggering” electricity costs in mining bitcoin as factors keeping the cryptocurrency from becoming a widely used form of payment.

He went on to add:

So the current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment.

Does the RBA intend to issue its own digitized Australian dollar? The short answer is “no immediate plans”, Lowe said, admitting that the question is being asked increasingly frequently at a time when central banks around the world are researching their own cryptocurrencies. Singapore, China and Russia are notable examples of ongoing research and pilots of central bank-issued cryptocurrencies on a blockchain.

There hasn’t been a convincing case yet for “issuing digital Australian dollars on the blockchain for use with limited private systems”, Lowe added, before admitting that the decentralized technology could lead to “more efficient, lower-cost business processes and payments.”