Financial heads continue to weigh in on Bitcoin’s legitimacy, and from Jamie Dimon to the IMF’s Christine Lagarde, the opinions are split. Now, Royal Bank of Canada CEO David McKay has said his piece, questioning its point and function in society.
The Canadian bank boss sees Bitcoin as a way to move money around undetected, following in a long line of traditional investors who see Bitcoin as a dark art of currency.
"The purpose Bitcoin seems to serve today is really to help move money in a hidden way and facilitate, potentially facilitate, criminal activity of moving money in an undetected way," McKay said.
"I think some people will call it a fraud. I don't think it's fraudulent … But it doesn't solve a main need in society right now."
Traditional idea of money
Because the CEO obviously works closely with fiat currency, it seems he is having difficulty in fathoming its deeper functions. McKay says he battles to see its legitimacy in comparison to other currencies.
"A currency is a promissory note on a future good and service and economy. I hold a dollar, or a pound or a euro because I want to exchange it for a physical good or a service sometime in the future and I'm confident in holding that note because of the political system backing it, because of the strength of the economy, because of a central bank with reserves."
"So when you look at those characteristics and the real need for a currency, how do you apply that to a cryptocurrency? Most of those criteria don't fit; it's not backed by a government, it's not backed by the rule of law, it's not backed by economy, there's no reserve against it, you actually have to mine it in a distributed chain environment," said McKay.
Blockchain over Bitcoin...again
There is little doubting that Blockchain technology is here to stay, and there are many traditionalists that are getting excited about that technology while also shunning its offshoot, Bitcoin.
McKay is in this same boat, backing the underpinning technology.
"Most people in the world aren't talking about Bitcoin. They're talking about Blockchain, the distributed ledger private or public that underpins the Bitcoin application of it," said McKay.
"It has a chance to transform everything from our capital markets, and our trading businesses, our security settlement businesses, right into our retail franchise. And so that technology, that ability to work in code and build solutions, are two new technologies and areas that we need."