 has said that the “Bitcoin is destined to become a niche asset,” In a report released on){kind=link}
The chief economist for the Dutch bank ING (AMS: INGA) has said that the “Bitcoin is destined to become a niche asset,”
In a report released on Monday, Teunis Brosens said the cryptocurrency’s rise in value was unsustainable and will be limited to “tech nerds, people obsessed about their privacy, [and] people afraid of (hyper) inflation of traditional currencies.”
ING’s principal economist argued in the note titled “A cryptocurrency reality check,” that the Bitcoin will fail to enter mainstream financial systems due to the lack of regulatory supervision, slow transaction speeds and high transaction costs on the network.
“Currently, Bitcoin is able to process about 7 transactions per second,” he wrote. “For Bitcoin to play a meaningful role as a payment system, the transaction processing power needs to be a 100, maybe even a 1000 times better.”
Brosens also highlighted to problems of high volatility, saying: “A world in which your money buys you a large latte today, but only a small espresso tomorrow, is hardly convenient.”
This is despite Bitcoin’s rise in value from $1,000 to over $10,000 just this year.
“Bitcoin’s high-value today is based on shaky foundations,” wrote Brosens in his letter. “The only justification for investing in bitcoin today is the assumption that others are willing to buy bitcoin at higher prices in the future.”
“You will find people (often invested in bitcoin themselves) arguing that buy-and-hold is the Bitcoin strategy to use. Oh and please don’t sell but do hold, because otherwise, you’re spoiling it for everyone else. If that indeed is today’s dominant Bitcoin application, then it has drifted far from the goal [bitcoin founder Satoshi] Nakamoto had in mind in 2008.”
ING boss is not the only one sceptical of the cryptocurrency. RBS boss Sir Howard Davies recently compared the currency to Dante’s Inferno – warning of an apocalyptic ending.
The heads of Goldman Sachs (NYSE: GS) and JP Morgan (LON: JMC) have also expressed concerns, saying the currency should be outlawed due to its links with drug dealers and other illicit actors.