Bitcoin Not Practical as Payment Mode, Says British Central Bank Governor Andrew Bailey

Andrew Bailey, the governor of UK’s Bank of England (BoE) has once again projected despise against Bitcoin. As per Bailey, the oldest and largest cryptocurrency by market cap is not a practical payment alternative. At the time of writing, Bitcoin prices were hovering around $31,486 (roughly Rs. 24 lakh) on Indian exchange CoinSwitch Kuber. The BoE chief believes that BTC has no intrinsic value, whatsoever. His statements come at a time when BTC, along with majority cryptocurrencies, are struggling to recover from the losses caused due to Terra’s crash.

Bailey, 63, made his statements while speaking on the Jobs of the Future podcast this week.

“I am probably not liked by the advocates of Bitcoin because I have said I don’t think it has any intrinsic value. It can have extrinsic value in the sense that people want to own it — people collect all sorts of things — but it doesn’t have intrinsic value. I don’t think that is really a practical means of payment,” Bailey said in his interview.

Bailey has often spoken against Bitcoin, citing its decentralised nature and proneness to volatility as major issues subject to market risks.

In December 2021, Andrew Bailey, the governor of the BoE expressed concerns for the citizens of El Salvador, questioning if Salvadorans were even aware of the risks they have exposed their finances to.

While he believes that blockchain technology, the underlaying tech for cryptocurrencies, does have interesting use cases — Bailey does boast about not holding any crypto assets himself.

Bailey’s comments come in the backdrop of England’s ongoing work on its national digital currency.

The UK has taken some progressive steps in the crypto sector, despite resilience from its central bank officials.

In April, UK recognised stablecoins as an official payment alternative in the country. Stablecoins, like Tether and Binance USD, are crypto assets pegged to reserve assets like gold or fiat currencies. So, even if the crypto market is down, they can still see gains due to the performance of its underlaying asset.

In fact, Rishi Sunak, the British Chancellor of the Exchequer ordered the creation of tradeable, government-backed NFTs as part of his plans of transforming UK into a global crypto hub.

The British government is also looking to establish a financial market infrastructure (FMI) called the ‘Sandbox’ that will enable firms to experiment and innovate in providing the infrastructure around crypto services.

Meanwhile, Bailey is not the only person to have argued that BTC is not a viable option for everyday payments.

Earlier this month, Sam Bankman-Fried, the CEO of FTX crypto exchange said that Solana appears to be a better option than BTC to be taken up as a payment alternative. Bankman-Fried feels that BTC’s Proof-of-Work (PoW) mining model makes it an expensive choice, also detrimental to the environment.

In December last year, Elon Musk had also said that Dogecoin was more deserving of being a transactional currency because BTC was not a suited substitute.

At the time, Musk has called BTC a better investment tool, rather than a deployable daily payment alternative.