Bitcoin never to become a global currency, nothing backs it up

Bitcoin never to become a global currency, nothing backs it up
Bitcoin currency is something akin to the apteryxes of the economic universe: nothing is backing it up, so eventually it will collapse as a bubble, Financial Advisor Margaret Bogenrief, co-founder of ACM Partners, told RT.

“If you look at what happened in April of this year where it went from $260 down to $50, back up to $100. I think eventually the system will overload, the bubble will pop, and [Bitcoin] will not necessarily cease existing, but it will stop taking up so much inherent value,” Bogenrief said.

Bogenrief does not think United States government should be or really is afraid that Bitcoin will take over the dollar as any kind of major currency. Economically it’s simply impossible, she claims.

“Bitcoin is definitely virtual currency and it is definitely an interesting concept. The problem with Bitcoin is that unlike the dollar, unlike gold, unlike even land there is nothing actually backing it up other than the inherent trust in transactions between its users,” Bogenrief told RT.

Thus, she believes, it will never become a global currency, either officially or unofficially.

“I’d like to use a really common example. If you look at the south in the United States during the Civil War, that country also had a currency. The problem was it wasn’t backed up by anything. By the end of the Civil War that currency was actually being supported by the Northern dollar,” she added.

The recent rise of Bitcoin does not mean that traditional currency is dying, Bogenrief continues.

“Traditional currency isn’t necessarily losing its position. I just think that things are tending to even out across the global markets. What I find so interesting about Bitcoin and in all the hypes surrounding Bitcoin is, like I said, is not an official currency, and it is interesting to talk about thing like these, what I like to call, apteryxes in the economics universe,” she says. 

“But the issue is if you look at the general economics and currency specifically, currencies are backed up by governments, they are backed up by gold, silver, other infrastructures. The problem with Bitcoin is that nothing is backing it up,” she believes.

AFP Photo / George Frey

As US fugitive Edward Snowden’s defense fund announced it now accepts Bitcoin donations, New York’s banking regulator issued subpoenas for the companies involved in its market due to worries that it can be used for illegal activities, as it does not comply with state laws.

Bogenrief says the fact that you don’t know who runs it is one of Bitcoin’s primary problems.

“I appreciate the anonymity when it appeals to the individuals who use it, but you don’t actually know who is running it. No one actually knows who started Bitcoin. For me it’s a fundamental issue, that I think makes it a problematic currency,” she says. 

“I understand the need to investigate it in terms of terrorism and drug cartels and the threats that it does pose being an unmonitored currency,” she added.

“But if you actually look at the utilization of Bitcoin, the current threat that it poses to the United States and other western democracies is actually very limited when compared to several other terrorist threats that you have already seen the country dealing with in the last 10-15 years.”