Wednesday, February 19, 2020

St. Louis Fed President James Bullard Says That Volatility Hurts Bitcoin Adoption

BTCNN
BTCNN
BTCNN aim to be the key source for both digital currency experts and newbies. With the cryptocurrency industry growing so fast we want to educate our readers about all the latest developments as they happen.

James Bullard, the St. Louis Federal Reserve President, declared this morning how he thinks that the most important factor that is currently playing against cryptocurrency usage and adoption is volatility in exchange rates. He declared this after his speech at the Coindesk Consensus Conference to a CNBC journalist in New York City.

James Bullard is one of the most influential economists in the whole world. He has a degree in economics, quantitative methods, and information systems. He is also very active in writing research and academic papers. He has published them in the American Economic Review, the Journal of Monetary Economics, amongst other important economic newsletters.

Bullard assisted to Coindesk Consensus Conference 2018, and here he talked about inflation and cryptocurrencies. He said that volatility is a great problem for cryptocurrency usage and adoption. About this, he stated:

“THE EXCHANGE RATE PROBLEM IS A BIG DEAL, BECAUSE YOU DON’T KNOW HOW THEY’RE GOING TO TRADE AGAINST EACH OTHER,”

James Bullard admits that this exchange rate phenomenon affects even trusted currencies, like the dollar and the yen. But with cryptocurrencies, it’s a bigger issue. When asked about the position of bitcoin in the market, he answered that bitcoin is enabling two type of operations that would not be possible otherwise: the legal ones, in which bitcoin is a cost-saving solution; and the illegal ones, in which bitcoin serves as an anonymity solution.

He also thinks that cryptocurrencies are a very far from being a danger to strong fiduciary currencies, like the dollar. Even in countries that face hyperinflation like Venezuela, people have adopted the dollar instead of cryptocurrencies as a trade currency. This has to do with the trust that the issuer of the coin enjoys from their adopters. The dollar is backed by a strong economy with low levels of inflation, and to him, that is a strong mix to beat.

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