Former Fed Chair Bernanke: Bitcoin Is Mainly Used in Underground Economy for Illicit Activities

Former Federal Reserve chairman Ben Bernanke says the main use of bitcoin is “mostly for underground economy activities and often things that are illegal or illicit.” He added, “I don’t think bitcoin is going to take over as an alternative form of money.”

Ben Bernanke on Bitcoin, Cryptocurrency

Former Federal Reserve chairman Ben Bernanke shared his view on bitcoin and other cryptocurrencies in an interview with CBNC Monday.

Bernanke is an economist who served two terms as the chairman of the U.S. Federal Reserve, from 2006 to 2014. He oversaw the Fed’s response to the late 2000s financial crisis during his tenure as chairman.

Noting that the values of bitcoin and other cryptocurrencies change minute-to-minute, he said Monday:

They’ve been successful as a speculative asset.

However, he pointed out that “They were intended to be a substitute for fiat money,” adding that “in that respect, they have not succeeded.”

He continued: “If bitcoin were a substitute for fiat money, you could use your bitcoin to go buy your groceries. Nobody buys groceries with bitcoin because it’s too expensive and too inconvenient to do that. Moreover, the price of groceries … varies radically day-to-day in terms of bitcoin so there is no stability either.”

He opined:

The main use of bitcoin is mostly for underground economy activities and often things that are illegal or illicit.

Bernanke further said:

I don’t think bitcoin is going to take over as an alternative form of money.

Nonetheless, he expects that bitcoin and cryptocurrencies “will be around as long as people are believers and they want to speculate.”

When asked if BTC is a store of value or digital gold in his opinion, Bernanke insisted that “it is a speculative asset.”