Bitcoin will be worthless. The big bank has expressed serious concerns about cryptocurrencies and their risks

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In a surge of criticism of cryptocurrencies comes another assumption of a major player in the UK’s financial system. The central bank has argued that bitcoin is a high-risk investment and may one day be worthless.

Like many other financial institutions, the Bank of England has warned people against investing in cryptocurrencies, he said The Guardian. However, concerns and warnings may stem from the threat posed by cryptocurrencies to the UK’s traditional financial system, according to the Bank’s Financial Policy Committee.

Not so long ago bitcoin set a big record, at which he reached a new high price of almost $ 69,000 in early November. Despite high volatility, the world’s largest cryptocurrency has a high investment valuation and is considered the most valuing asset in trading history.

The Bank of England sees bitcoin at zero and cryptocurrencies as a threat to the financial system

The Deputy Governor of the Bank of England, Sir Jon Cunliffe, expressed concern that the Bank must be prepared for the potential risks that rapidly growing cryptocurrencies may pose. “Their price can vary considerably and could theoretically or practically drop to zero,Cunliffe said in an interview with BBC.

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According to him, about 0.1% of English households currently own cryptocurrencies, which is about 2.3 million people who hold an average of £ 300 in cryptocurrencies.

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Cunliffe continued to express concerns that a large price correction could occur following the integration of cryptocurrencies into the financial system, which he said could “affect other markets and affect established financial market players.” However, the Deputy Governor no longer revealed the specifics of his concerns.

That is why, according to Cunliff, the bank should be prepared for a response, which stricter regulations should help in the future. Paradoxically, however, he made the allegations in an interview with the BBC shortly after the country’s central bank published its latest report on the health of the financial system in the United Kingdom.

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According to previous information, inflation in the country reached a 10-year high and rose by 5.1% year on year in November. Back in October this year, the year-on-year change in inflation was 4.2%.

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At the same time, the Bank of England expected inflation to rise to 5% by next spring. However, he claims that inflation should fall to 2% by 2023. At the moment, it is too early to confirm such estimates, the further development and gradual slowdown in inflation will depend on monetary policy.

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According to Thomas Belsham, a shareholder and member of the Bank of England’s media involvement division, bitcoin itself is intended to attract investors only because of the limited amount of coins that can be mined.

In total, a maximum of 21 million bitcoins can be mined, with 90% of all coins mined so far. The last block should then be mined sometime around 2140. According to Belsham, this system will be difficult to sustain over time.

The other big players are heading in the opposite direction

However, other large banks abroad are looking at the other side of the coin. One of the largest investment firms, JP Morgan, which even fired employees if they invested in cryptocurrencies, expressed similarly strong criticism of bitcoin, blockchain and cryptocurrencies.

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Paradoxically, however, it was JP Morgan that recently introduced its own NFT, for which it is paid by cryptocurrencies, he noted. CoinDesk. One of these NFTs even sold for 420 ETH earlier in the month (about $ 1.7 million at the time of writing). The multinational investment bank Bank of America has previously taken a similar step.

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It was the adoption of cryptocurrencies that helped grow bitcoin last year, as well as other projects that are of interest to more and more large institutions and financial companies. The two-sided play he showed after JP Morgan’s criticism is thus one of the proofs that even large financial institutions do not want to lag behind the wave that can bring them a profit.

Many other banks are already considering accepting the purchase of bitcoin by their clients, who could buy the world’s largest cryptocurrency directly through their bank. An example is the German Savings Bank, which plans to start trading in bitcoin next year, informs Bitcoin Magazine.

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It also has a branch in Slovakia, but the operation of Slovenská sporiteľňa, as well as other branches of German Sporiteľňa in the world, is relatively independent, and therefore it is not clear that we will see a similar step in our region.