Cryptocurrencies regularly see attacks from certain conventional investors and figures with ties to the traditional banking system. Now, the president of the Federal Reserve Bank of Minneapolis is joining in on criticizing the cryptocurrency market.
Neel Kashkari chooses low-yield Treasury bond over Bitcoin
The cryptocurrency market has taken a slight dip in recent days. This consolidation comes after a massive display of bullish momentum, which brought Bitcoin to a year-high of nearly $10,500. At the moment of writing, Bitcoin is currently trading at roughly $9,800.
Nevertheless, it would seem that this price is still far too high for Minneapolis’ Federal Reserve President, Neel Kashkari. During a Town Hall meeting in Montana on February 12th, Kashkari was candid about his views on crypto – and they are decidedly not positive.
The moderator at the event, Washington Companies CEO Larry Simkins, asked Kashkari whether he would prefer gifting his one-year old daughter one Bitcoin or a low-yielding Treasury bond.
It was immediately clear that Kashkari was not going to heap praise upon the Bitcoin alternative. Specifically, Kashkari broke out into laughter at the mere question, before stating that “[b]etween the two, I think low-yield Treasury
Kashkari: Crypto is “a giant garbage dumpster”
Kashkari then went on to share more of his views on Bitcoin and the crypto market as a whole. He also said that the US dollar’s value comes from the US government’s monopoly on producing it:
“The Bitcoin and cryptocurrency, it’s basically, it’s like a giant garbage dumpster. The reason that the dollar has value is because the U.S. government has a legal monopoly on producing the dollar.”
Kashkari also suggests that the mere existence of cryptocurrencies is similar to counterfeiting. This statement will no doubt face harsh criticism from the crypto community, as it gives central banks immense power. Moreover, cryptocurrencies do not try to imitate existing fiat currencies, as Kashkari’s comparison suggests:
“If you go in your basement and start photocopying your dollar bills, the Secret Service will come and knock on your door and arrest you. Only the U.S. government has the authority to produce dollars, scarcity is in part what makes them valuable.”
“Crypto market is fleecing investors”
Kashkari then went on state that the crypto market is “fleecing” investors, pointing towards the vast number of altcoins.
“Well, the virtual currency, cryptocurrency world, there are thousands of these garbage coins out there, thousands of them literally, people have been fleeced for tens of billions of dollars, and finally, the SEC is getting involved in cracking down on this, but people are just getting fleeced by nonsense.”
These statements are particularly interesting, seeing as a recent document reveals US intelligence views crypto as the dollar’s top threat. As such, it is clear that the crypto market is not only the “giant garbage dumpster” Kashkari is suggesting it is.
With that said, however, there is a vast number of altcoins without clear utility – commonly known as “shitcoins”. The underlying technology, however, is still just a solid and is clearly making an impact around the world.
Kashkari: “So far all that’s emerging is burning garbage”
Nevertheless, there are many observers – like Kashkari – who are decidedly negative towards Bitcoin and the crypto market. For example, the legendary investor Warren Buffett claims Bitcoin is “worse than rat-poison”.
One should note, however, that Kashkari recognizes that Bitcoin could have a positive impact in the future – although he also calls the entire industry “burning garbage” in doing so:
“Maybe five years from now, or ten years from now, or 20 years from now, something useful will emerge from this but so far all that’s emerging is burning garbage.”
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.