Bitcoin Is Barter, Not Money, Bank of Mexico Governor Says

Bitcoin adoption as legal tender by El Salvador earlier this week was beset by glitches and protests.

Bitcoin Is Barter, Not Money, Bank of Mexico Governor Says

The value of cryptocurrencies have often swung wildly in a single day

Highlights
  • The Governor said Bitcoin is more like a dimension of precious metals
  • He added that Bitcoin would also need to safeguard its value
  • He suggested cryptocurrency is not a reliable payment method

Bitcoin is more like a means of barter than "evolved" fiat money, Mexico's central back chief said on Thursday, calling it a high-risk investment and a poor store of value.

Bank of Mexico Governor Alejandro Diaz de Leon's comments suggest Mexico will not be following El Salvador any time soon in adopting the digital currency as parallel legal tender.

"Whoever receives Bitcoin in exchange for a good or service, we believe that (transaction) is more akin to bartering because that person is exchanging a good for a good, but not really money for a good," said Diaz de Leon. Bitcoin price in India stood at Rs. 36.67 lakhs as of 11am IST on September 10.

"In our times, money has evolved to be fiat money issued by central banks," he said. "Bitcoin is more like a dimension of precious metals than daily legal tender."

The Banxico boss argued that in order for a cryptocurrency to be considered money it must be a reliable payment method. He added that Bitcoin would also need to safeguard its value.

Diaz de Leon pointed out that the value of cryptocurrencies have often swung wildly in a single day.

"People will not want their purchasing power, their salary to go up or down 10 percent from one day to another. You don't want that volatility for purchasing power. In that sense, it is not a good safeguard of value," he said.

The unprecedented adoption of Bitcoin earlier this week as legal tender by El Salvador has been beset by problems that have contributed to a rout in the value of the digital currency globally.

Bitcoin has been notoriously volatile. In April it rose to over $64,000 (roughly Rs. 47 lakhs) and fell almost as low as $30,000 (roughly Rs. 22 lakhs) in May.

It last traded up 2.44 percent at $47,179.04.

© Thomson Reuters 2021


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