The chair of the Federal Reserve (Fed), Mr. Jerome Powell, said that cryptocurrencies are primarily “speculative assets” and added that the central bank would not be in a hurry to develop the digital currency. However, according to economic reporters, this statement de facto confirmed the legitimacy of virtual currencies as a future investment tool of the global financial market. Cryptocurrencies have attracted the attention of central bankers, especially after a record increase of the most widespread virtual currency, Bitcoin (BTC), when the exchange rate exceeded US$ 60,000 per BTC.
According to cryptocurrency analysts Bitcoin is the only medium of exchange that can offset central banks printing money. “Bit gold” and “b-Money” concepts were the basis for the creation of Bitcoin. There is now an official software client for payments, managed by volunteers from around the world and several alternative clients. Since 2011 conferences have been held all around the world on Bitcoin, economy, possibilities and implications of this currency. In September 2012, the non-profit company Bitcoin Foundation was established to take care of the Bitcoin infrastructure, monitor threats and possibly improve protocols, organize conferences and promote the currency. However given the decentralized nature of the network, the foundation has no special powers as the majority always makes decisions. In 2014, the Apache Software Foundation, a non-profit organization, began accepting donations in Bitcoins.
On 23 March 2021 at 7:32 am, BTC traded on the Coinbase digital currency market at a mutual exchange rate of US$ 53,712.75 per BTC with the current daily decrease of – 1.48% of the previous exchange rate. According to analysts this decline is due to profit withdrawals – lasting for several days – made by investors in the previous period. However, according to experts, the exchange rate of BTC above US$ 50,000 per BTC is still relatively high compared to the exchange rate during the last 52 weeks. Along with this fact, the almost negative opinion by Mr. Powell could also have caused lower investor interest in cryptocurrencies in general and BTC in particular.
This relatively negative view by Mr. Powell may have its reason in the fact that cryptocurrency regulation is out of central bankers’ hands, and that is why BTC has become so popular and enjoyed high interest from speculative investors who are willing to take significant investment risk. Mr. Powell also said on Monday, 22 March that cryptocurrencies remain unstable and are highly volatile, therefore the US Federal Reserve is in no hurry to introduce a competitor. “They’re highly volatile, and therefore not really useful as a store of value,” he stated, during a virtual summit on digital banking hosted by the Bank for International Settlements. “It’s essentially a substitute for gold rather than for the dollar,” he added.