Yellen sounds warning about ‘extremely inefficient’ bitcoin

Janet Yellen, U.S. President-elect Joe Biden’s nominee to be treasury secretary, speaks as Biden announces nominees and appointees to serve on his economic policy team at his transition headquarters in Wilmington, Delaware, U.S., December 1, 2020.

Leah Millis | Reuters

Treasury Secretary Janet Yellen issued a warning Monday about the dangers that bitcoin poses both to investors and the public.

Despite a sharp slide in price to start the week, the cryptocurrency continues to trade above $53,000 as it has received boosts from various sources. Elon Musk‘s Tesla recently made a substantial purchase and has said it will accept bitcoin for transactions.

However, Yellen said there remain important questions about legitimacy and stability.

“I don’t think that bitcoin … is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at a New York Times DealBook conference. “To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

Mining bitcoin requires users to solve complex mathematical equations using high-powered computer setups. The electric consumption used in the process leaves an annual carbon footprint equal to the nation of New Zealand, according to Digiconomist.

In addition to consumption concerns, bitcoin also is considered to be a tool of those involved in a number of illegal activities because its use is difficult to trace.

Then there’s volatility, as the cryptocurrency’s price has seen rapid peaks and valleys during its existence.

“It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer,” Yellen said.

Various government agencies have contemplated the idea of making an alternate digital currency with the hopes that it would open up the global payments system to those who don’t have access.

The Federal Reserve, where Yellen once served as chair, has studied the issue and discussed the possibility of a new digital currency along with a payments system it expects to roll out over the next several years.

“I think it could result in faster, safer and cheaper payments, which I think are important goals,” Yellen said.

Speak Your Mind

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Get in Touch

350FansLike
100FollowersFollow
281FollowersFollow
150FollowersFollow

Recommend for You

Oh hi there 👋
It’s nice to meet you.

Subscribe and receive our weekly newsletter packed with awesome articles that really matters to you!

We don’t spam! Read our privacy policy for more info.

You might also like

Cisco acquires Modcam to make Meraki smart camera portfolio...

As the Internet of Things proliferates, security cameras are getting smarter. Today, these devices...

Pull Systems launches out of Up.Labs-Porsche partnership to tackle...

When Porsche partnered with venture studio UP.Labs, the mission was to create six startups...

5 Clear Signs You Should Consider Outsource Help –...

Running a business is very rewarding, but it can also be quite overwhelming. In...

Joe Flacco Can Help New York Jets QB Sam...

ORCHARD PARK, NEW YORK - NOVEMBER 24: Stephen Hauschka...