In a blunt assessment, Bank of England Governor Andrew Bailey poured cold water on Bitcoin’s ambitions as a mainstream payment method, declaring it “not taking off” due to its inherent inefficiency. His comments reignite the debate about Bitcoin’s viability as a daily transaction currency and highlight the challenges it faces in achieving widespread adoption.
Not a Core Financial Service
In a blunt assessment that sent ripples through the cryptocurrency community, Bank of England Governor Andrew Bailey poured cold water on Bitcoin’s aspirations as a mainstream payment method. “My own sense is that it’s not taking off as what I might call a core financial service,” he declared before the UK Parliament’s Treasury Committee, adding bluntly: “using Bitcoin as a payments method is pretty inefficient.” He added that Bitcoin isn’t taking off as what he might call “a core finance.”
Bailey’s criticism centered on Bitcoin’s notorious slow transaction speeds and hefty energy consumption, both of which he sees as dealbreakers for widespread adoption. “I wouldn’t use it to buy my coffee,” he quipped, further highlighting his doubts about Bitcoin’s real-world practicality.
Casts Shadows on Bitcoin’s Viability as a Means of Payment
These remarks, coming from a prominent central banker, carry significant weight, reigniting the long-standing debate about Bitcoin’s viability as a daily transaction currency. While its price may fluctuate wildly, its suitability for everyday purchases faces clear hurdles.
Naturally, Bailey’s comments drew mixed reactions. Bitcoin proponents argued he focused too heavily on perceived flaws, neglecting its valuable decentralized nature and store-of-value proposition. Others pointed to ongoing development efforts aimed at boosting Bitcoin’s transaction speed and efficiency.
Bitcoin Could Practically Drop to Zero
In her own submission, Bank of England Deputy Governor Sarah Breeden said,
“Bitcoin could practically drop to zero. It’s not a store of value. It’s not a medium of exchange. It’s not even a unit of account.”
The BOE officials also raised concerns about stablecoins, calling them “opaque” and presenting challenges to regulators. They emphasized the need for stablecoins to be properly regulated and for central bank digital currency (CBDC) to be developed with appropriate safeguards.
Inclination Towards a CBDC
The BOE’s December Financial Stability Report indicated that authorities are considering policy choices for stablecoins and CBDC, and that they will conduct a review of the implementation of their recommendations by end-2025.
Whether Bailey’s skepticism although not at tangents with the cautious approach of most central banks, proves prescient or Bitcoin overcomes its technical limitations remains to be seen. But one thing is clear: his blunt assessment throws down the gauntlet, challenging the cryptocurrency to address its shortcomings and prove its worth as a real-world payment solution.