World Economic Forum: is Bitcoin Too Volatile to be Used as Currency?

In Davos at this year’s World Economic Forum, Bitcoin has continued to be a polarizing subject, attracting both criticism and praise from business figures, industry experts, and world leaders.

Nobel Prize-winning economist Robert J. Shiller had the following to say about the cryptocurrency: “I tend to think of Bitcoin as an interesting experiment, not a permanent feature of our lives. We’re over-emphasizing Bitcoin, we should broaden it out to blockchain, which will have other applications.” Shiller is not alone, other Bitcoin critics have conceded that they do see genuine promise in blockchain, the decentralized technology behind cryptocurrencies. Mark Zuckerberg, for example, believes it can be used to improve Facebook.

Bitcoin itself, however, has not yet convinced the large majority of its staying power, this often due to the token’s lack of stability. It hit a record high when it approached $20,000 in mid-December, but then tumbled rapidly, falling to below $12,000 within a few days. As we’ve seen, the token’s value has continued to shift ever since, with frequent drops and recoveries.

Cecilia Skingsley, deputy governor of the Swedish Central Bank, was also skeptical about Bitcoin during the panel session. “It’s too volatile to be used as money,” she asserted. Adding that digital currencies: “Don’t store value, they fluctuate, and they’re not at a stable rate of exchange”. This is the reason payment processor Stripe gave for its decision to end support for payments using Bitcoin. According to the company: “[Bitcoin] evolved to become better-suited to being an asset than being a means of exchange.”

There were, however, others in Davos who saw reasons for optimism. “I think this is one of the most audacious, generous and profound inventions that I’ve witnessed in my career,” said Neil Rimer, general partner and co-founder of Index Ventures SA, during the panel. “We’re nine years into this experiment. It’s gone well at times and quite poorly. It could fail completely and go to zero, but it has accomplished a number of things I think are remarkable.” With regards to regulation, Rimer conceded: “I do think [Bitcoin] needs to be regulated, just like anything I would want to become mainstream should be regulated.”

Cryptocurrencies are a diverse topic, but what’s certain is that the discussions in Davos have further brought it on to the world stage — which can only be a good thing for the cryptosphere. This sentiment is echoed in a statement by Nic Cary, co-founder of cryptocurrency wallet Blockchain, who said: “To us, we are seeing increases in transaction volume and to me, that’s one of the first indicators that more people are using this in their daily lives and that’s really interesting to me.”

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