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Bitcoin Not A Real Currency, Says UBS Chairman

Josh O'Neill

6 October 2017

The chairman of the world's largest wealth manager has questioned bitcoin's validity as a currency, the latest in a choir of voices to express scepticism about the controversial crypto-currency.

“I get often asked why I'm so sceptical about bitcoin; it probably comes from my background as a central banker,” Axel Weber, chairman of and former Bundesbank president, said at a conference organised by the Swiss Finance Institute. 

“The important function of a currency is, it's a means of payment, it has to be generally accepted, it has to be a store of value and it's a transaction currency. Bitcoin is only a transaction currency.”

Still, he was more upbeat on blockchain, the technology underpinning bitcoin and other crypto-currency transactions, and said that over time the idea of a digital ledger would be widely accepted by banks and other financial institutions. 

Weber's comments about bitcoin chimed with slurs made by JP Morgan chief executive Jamie Dimon, who called the crypto-currency a “fraud”. 

Both touts contrasted, however, Goldman Sachs' CEO Lloyd Blankfein, who earlier this week tweeted: “Still thinking about #Bitcoin. No conclusion – not endorsing/rejecting. Know that folks were skeptical when paper money displaced gold.”

Blankfein's tweet followed a report by this publication that his bank was weighing a new trading operation dedicated to crypto-currencies, potentially breathing new life into bitcoin which has suffered price dips as of late. 

Bitcoin was spawned in 2009 by an unidentified person or group operating under the pseudonym Satoshi Nakamoto. In the wake of the 2008 financial tsunami, so-called “cypherpunks” sought to create a decentralized payment system independent of distrusted central banks and free of regulatory burden.

While banks have generally steered clear of bitcoin, the crypto-currency has gained the support of some money managers, technology enthusiasts and speculators wooed by its price swings.

Its price has rocketed this year, from $969 per coin to as much as $5,000 at its peak. Ethereum, another crypto-currency, has traded as high as $400 after ending 2016 at $8. There are nearly $150 billion worth of crypto-currencies in circulation, with bitcoin accounting for over $73 billion of this. 

Bitcoin was up 1.93 per cent at the time of writing (14:18, 5/10/2017), trading at $4,307 per coin, according to CoinDesk. Over the past week, the crypto-currency has traded at lows of $4,049 and highs of $4,458, highlighting its volatility.