Singapore’s central bank chief Ravi Menon has predicted that private cryptocurrencies will eventually fade away.
In a recent speech, Menon said that private cryptocurrencies have “miserably failed the test of money” because they cannot store value effectively.
“Private digital coins have miserably failed the test of money because they can’t keep value,” Menon said. “Nobody keeps their life savings in these things. People buy and sell these things to make a quick buck.”
Menon’s comments echo those of other central bankers around the world who have expressed concerns about the risks posed by private cryptocurrencies. The Bank for International Settlements (BIS), a group of central banks from around the world, has warned that private cryptocurrencies could pose a threat to financial stability.
In contrast to private cryptocurrencies, central bank digital currencies (CBDCs) are digital currencies issued by central banks. CBDCs are backed by the full faith and credit of the central bank, which means that they are a safe and reliable store of value.
Menon said that he believes that CBDCs will eventually replace private cryptocurrencies as the dominant form of digital asset. He said that CBDCs offer a number of advantages over private cryptocurrencies, including:
- They are safe and reliable. CBDCs are backed by the full faith and credit of the central bank, which means that they are a safe and reliable store of value.
- They are efficient. CBDCs can be transferred quickly and easily, which makes them a much more efficient form of payment than private cryptocurrencies.
- They are regulated. CBDCs are subject to regulation by the central bank, which helps to protect consumers from fraud and abuse.
Menon’s prediction that private cryptocurrencies will eventually fade away is a significant one. It suggests that the future of digital currency lies in CBDCs, not private cryptocurrencies.
Here are some of the reasons why private cryptocurrencies may fade away:
- They are volatile. Private cryptocurrencies are highly volatile, which means that their prices can fluctuate wildly. This volatility makes them a risky investment and a poor store of value.
- They are unregulated. Private cryptocurrencies are not subject to regulation by any central authority. This lack of regulation makes them susceptible to fraud and abuse.
- They are not widely adopted. Private cryptocurrencies are not widely adopted, which means that they are not a practical form of payment.
CBDCs, on the other hand, offer a number of advantages over private cryptocurrencies. They are safe, reliable, efficient, and regulated. As a result, they are likely to become the dominant form of digital currency in the future.