Given the recent price surge, digital currencies have begun attracting a lot of attention from governments and financial institutions. Recently, Allianz Chief Economic Advisor Mohamed El-Erian made his own statement on Bitcoin.
Bitcoin seen as a commodity
According to El-Erian, while Bitcoin may have attracted a lot of interest from investors and the general public, it still lacks the stability required by a currency. In his statement, he noted:
A currency serves as a predictable store of value, and serves as a medium of exchange that’s pretty stable in value as well — bitcoin isn’t there yet, they’re still trying to find stability so it’s more of a commodity than it’s a currency.
This statement follows El-Erian’s comments about the digital currency last month, when he claimed that its price should be half of what it was then. However, Bitcoin has since surged from US$4,000 to over US$7,000.
Many believe that institutions and organizations are only warning against bitcoin as it’ll likely change up the financial industry in the years to come. Therefore, some organizations may be hard at work trying to figure out ways to either make bitcoin profitable for them or stop its adoption.
While El-Erian’s comments aren’t overtly negative, he did state:
My major concern over the long term is: Is the assumption in the pricing about adoption consistent with reality? That’s the issue that investors should ask if they’re holding bitcoins for a couple of months.
Regardless, Bitcoin recently received a big boost from the CME Group, the world’s biggest derivatives operator, after the company announced plans to launch bitcoin futures by the end of the year. This will bring more institutional investors to the world of cryptocurrency, leading to more investment and a possible value increase down the road.
Based on these points, what are your thoughts on the recent comments made by public figures on digital currencies? Let us know your thoughts.