A Credit Suisse board member believes that digital assets do not have the function of money and therefore cannot replace fiat currencies.
Motive Capital Corp CEO Blythe Masters, speaking at the Credit Suisse 2022 conference in Hong Kong, said that cryptocurrencies, which are gaining popularity as an alternative to fiat money, are not capable of threatening traditional financial systems.
“To this day, I remain skeptical of many of the arguments being made about why bitcoin will eventually win out against fiat currencies and devalue the banking business,” Masters says.
Adherents of the theory of the displacement of traditional financial assets by bitcoin rely only on promises that cryptocurrencies will be able to protect money from inflation, says Masters. A Credit Suisse board member disagrees and argues that we have yet to be convinced of the effectiveness of cryptocurrencies as a tool to protect against inflation:
“Any single cryptocurrency can be in limited supply, but there are an infinite number of cryptocurrencies available that are easy to invent. And I have a fundamental question about the long-term inflation protection that cryptocurrencies provide.”
The head of Motive Capital Corp opined that precious metals, as before, represent the best hedge against inflation.
According to Masters, digital assets are just a new form of money that has a number of advantages over fiat currency. However, it is often used in speculation and illegal activities:
“To be a form of money, it must be a store of value, a unit of account, and a medium of exchange. And in many ways, none of the vast family of cryptocurrencies has lived up to the promise of demonstrating performance that meets all three criteria.”
Cryptocurrency enthusiasts are not the only ones who believe that digital assets can replace fiat. Salvadoran President Nayib Bukele said that the bill on the risks to the US financial system speaks to the concern of the US authorities about the adoption of bitcoin as a means of payment in El Salvador. Edward Snowden said last week that governments see cryptocurrencies as a threat to their power. In February, the Spanish central bank warned the authorities about the risks of integrating cryptocurrencies into banking services.