Janet Yellen, the nominated candidate of US President Joe Biden to become Treasury Secretary, speaks as Biden announces on December 1, 2020 candidates and nominees to serve on his economic policy team at his transition headquarters in Wilmington, Delaware, USA .
Leah Millis | Reuters
Finance Minister Janet Yellen on Monday issued a warning about the dangers bitcoin poses to investors and the public.
Despite a sharp rise in the price to start the week, the cryptocurrency continues to trade at more than $ 53,000 as it has received a boost from various quarters. Eles Musk’s Tesla recently made a substantial purchase and said he would accept bitcoin for transactions.
Yellen, however, said important questions remain about legitimacy and stability.
“I do not think bitcoin is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at the New York Times’ DealBook conference. “To the extent that it is used, I fear it is often for illegal financing. It is an extremely inefficient way of conducting transactions, and the amount of energy consumed to process the transactions is staggering.”
Bitcoin mining requires users to solve complex mathematical equations using strong computer setups. The electricity consumption used in the process leaves an annual carbon footprint equal to the land of New Zealand, according to Digiconomist.
In addition to concerns about consumption, bitcoin is also considered a tool for those involved in a number of illegal activities, as its use can be difficult to detect.
Then there is volatility, because the price of cryptocurrency has seen rapid peaks and valleys during its existence.
“It’s a very speculative asset and you know I think people should be aware that it can be extremely volatile and I’m worried about potential losses that investors could suffer,” Yellen said.
Several government agencies have considered the idea of creating an alternative digital currency, hoping that it will open up the global payment system to those who do not have access.
The Federal Reserve, once chaired by Yellen, has studied the issue and discussed the possibility of a new digital currency, along with a payment system it is expected to introduce over the next few years.
“I think it could result in faster, safer and cheaper payments, which I think are important goals,” Yellen said.