The Federal Reserve Bank of New York has claimed that cryptocurrencies are “unlikely” to become a viable opponent to the US dollar in the coming years.
The Fed released a research paper on the supremacy of the US dollar on Monday, in which it states that while cryptocurrencies were set up to challenge the traditional banking system, they are unlikely to make a difference in the near to medium term.
“Cryptocurrencies, set up to challenge the conventional structure of payments in official currencies, thus far are unlikely to meet criteria for international roles in the near to medium term. Widespread use of online retail platforms has not yet challenged dollar roles,” it commented.
The Fed’s pejorative opinion of digital assets and currencies is nothing new. Speaking in 2018, the head of the San Francisco Reserve, John Williams, stated that Bitcoin “doesn’t pass the basic test of what a currency should be.”
Good explainer from @NewYorkFed highlights common problems with crypto for payments – one of the reasons $XRP stands out from the pack is because it was designed for scalability and to be used with fiat, not to replace it. https://t.co/HFPhMOSSNp
— Brad Garlinghouse (@bgarlinghouse) February 9, 2018
Bitcoin’s price has fallen dramatically following the bull market of 2017. At the time of writing, it is bitterly clinging on to yearly lows at around $3,600 following an all-time high of $20,000 more than a year ago.
However, developments in projects such as the Lightning Network have shown that cryptocurrencies can scale to facilitate almost instant transactions, which from a fundamental standpoint could be key to Bitcoin’s potential use case as a global currency.
Twitter CEO Jack Dorsey has added fuel to the fire this week by stating that his company will implement Lightning payments within Cash App, which could drive mainstream adoption.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.