Top Fed Official Slams Bitcoin

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, recently criticized Bitcoin's role as an inflation hedge, arguing that the cryptocurrency has failed to provide any real utility in the decade since its inception. 

Addressing an audience, Kashkari pointed out that despite Bitcoin's prominence, it has not been adopted for regular transactions, such as purchasing everyday items. 

Questioning Bitcoin's utility 

Kashkari's remarks challenge the often-touted notion of Bitcoin being a shield against inflation.

He noted that during the recent inflation spike, Bitcoin did not hold up as a stable store of value, instead behaving like a risky asset and plummeting in value as interest rates rose. 

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This observation calls into question the cryptocurrency's reputed role as a safe haven during economic turmoil, a claim that has been a significant part of its appeal to investors.

"I've never met someone who's bought something using Bitcoin as a currency. So, I always ask what problem is this trying to solve. Well, first I heard, well, it's an inflation hedge, then when we had this big inflation spike...It turned out that Bitcoin was a terrible inflation hedge. When we raised interest rates, Bitcoin got crushed. It's just another risky asset. It's been more than 10 years, and no one has been able to articulate any actual utility in the real world other than an article of speculation," he said. 

Previous critiques 

This is not the first time Kashkari has voiced skepticism about cryptocurrencies. He has previously described the broader crypto market as filled with "thousands of garbage coins" and emphasized the lack of use cases beyond illicit activities such as drug trade and prostitution. In a 2021 statement, he went as far as to say that the industry is "95 percent fraud, hype, noise, and confusion." 

The central banker also expressed concerns about the proliferation of altcoins and the ease with which they can be created, which he humorously likened to the potential issuance of a hypothetical "Montana Coin."