Chairman of the U.S. Federal Reserve Jerome Powell said recently that he considers Bitcoin to be an alternative to gold rather than the dollar.
While speaking during the Bank of International Settlements Innovation Summit event, Powell said that Bitcoin was too volatile to replace traditional fiat currencies like the U.S. dollar. He supported the idea of Bitcoin as a digital gold that could have similar utility to precious metals.
Jerome called Bitcoin a “speculative asset,” and highlighted the market volatility for crypto: “Cryptoassets are highly volatile—see Bitcoin—and therefore not very useful as a store of value, and they’re not backed by anything.”
Jerome went on to say that Bitcoin is an “asset for speculation” and not particularly useful as a means of payment: “They’re more of an asset for speculation, so they’re not particularly in use as a means of payment. It’s more a speculative asset. It’s essentially a substitute for gold rather than for the dollar.”
Powell had previously compared Bitcoin to gold, saying in 2019 that the flagship cryptocurrency is a “speculative store of value, like gold.”
Powell also highlighted what he considers Bitcoin’s main problems: “I think with crypto assets, the public needs to understand the risks. There’s the volatility. There’s also the energy requirements for mining and the fact that they’re not backed by anything.”