The appeal of Bitcoin and other cryptocurrencies is that they “succeed as a speculative asset.” This was stated by Ben Bernanke, the former head of the US Federal Reserve System (FRS).

According to him, digital assets were “designed to replace fiat, but it did not succeed.”

“If bitcoin were an alternative to fiat money, you could use it to buy food. “No one buys products containing bitcoin because it is too expensive and inappropriate,” Bernanke said.

The former official also criticized the comparison of the first cryptocurrency to gold. He pointed out that the precious metal “has an essential value to use”, while in the case of bitcoin it “creates ransomware or something like that.”

“One of the risks with Bitcoin is that it can be much more regulated, and I think anonymity is also at risk,” the economist said.

Bernanke headed the Fed from 2006 to 2014. In this article, he defended inflation planning by issuing the dollar.

After public service, he joined economist Kenneth Griffin’s Citadel hedge fund as a consultant. In 2022, the latter admitted that his skepticism about digital assets was wrong and announced that the company was entering the cryptocurrency market as a liquidity provider.

Earlier, the former head of the Fed took a more supportive stance towards bitcoin, according to a letter sent to the US Congress in November 2013. At the time, Bernanke said that cryptocurrencies “could have long-term prospects, especially if innovation leads to a faster, safer and more efficient payment system.”

In May 2022, billionaire Ray Dalio called bitcoin a good insurance against inflation, but not a full-fledged alternative to gold.

Recall that analysts at Bank Of America pointed to an increasing relationship between the first cryptocurrency and the stock market, as opposed to the precious metal.