Janet Yellen, Former Chair of the U.S. Federal Reserve Snubs Bitcoin

Janet Yellen - the former chairperson of the U.S. Federal Reserve was speaking at the Canada FinTech forum in Montreal. Yellen, who has served the Federal Reserve for a four-year period between 2014-2018, talked about her concerns with Bitcoin and the possibilities of issuing a central-bank-backed-digital-currency (CBDC).

Yellen, during her speech, said that Bitcoin’s decentralized nature is itself the reason for alleviating its utility as a payment instrument. She said: “It has long been thought that for something to be a useful currency, it needs to be a stable source of value, and bitcoin is anything but. It’s not used for a lot of transactions, it’s not a stable source of value, and it’s not an efficient means of processing payments. It’s very slow in handling payments. It has difficulty because of its very decentralized nature.”

It is not for the first time that Yellen has been critical about her opinion on Bitcoin. Earlier in the testimony before Congress, Yellen said that Bitcoin is an extremely speculative asset. During her five-minute speech, Yellen goes to elaborate about investor risks, price volatility and the threats of hacking.

She said: "I will just say outright I am not a fan, and let me tell you why. I know there are hundreds of cryptocurrencies and maybe something is coming down the line that is more appealing but I think first of all, very few transactions are actually handled by bitcoin, and many of those do take place on bitcoin are illegal, illicit transactions.”

There is absolutely no doubt to it that Bitcoin is currently going through challenging times to accommodate millions of users on its blockchain network. Furthermore, it is understood that Blockchain is still in its early stage of development and will take some time to attain scalability at the level of Visa and MasterCard.

So although Bitcoin is not used for everyday transactions, it has emerged as an effective way of transferring millions of dollars across the borders in quick time. There is no doubt to it that the Bitcoin technology has managed to challenge the status quo of traditional banking systems. Furthermore, the other benefits of decentralization like extremely low transaction costs and high-end security far outweigh the existing systems.

Not only Bitcoin, Yellen even snubbed off CBDCs saying that they can have “negative impacts on financial stability”.