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November 27, 2022
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IMF stated that making bitcoin the official currency of a country “can be terrible”

IMF stated that making bitcoin the official currency of a country “can be terrible”, the reference to El Salvador seems quite obvious, although it is not mentioned directly.

In fact, the marketing director of IMF, Tobias Adrian, and General Counsel of Legal Rhoda Weeks-Brown explained that bitcoin can be a panacea for countries with high inflation and can help so-called non-bankers, but what they point out is that it can also be big risks .

In fact, the IMF stated that making bitcoin the official currency of a country “can be terrible”, there is a risk that prices will become unstable due to the high volatility of cryptocurrencies and that measures to combat money laundering and financing of terrorism are not followed.

Bitcoin and the risks for the environment

Adrian and Weeks-Brown also highlighted the risks to the environment, in line with the well-known objection to Bitcoin regarding energy consumption by mining and Proof of Work, the consensus mechanism on which the BTC blockchain is based.

These are their words:

“If the prices of goods and services were in real currency and in cryptoasset, families and businesses would spend a lot of time and resources choosing what money to keep instead of engaging in productive activities. Government revenues would be exposed to exchange rate risk if taxes were quoted in advance in a cryptoasset, while expenditures remained mainly in the local currency, or vice versa”.

In fact, even when Elon Musk said this by taking a step back from accepting bitcoin payments to Tesla, this issue had already been discussed, pointing out that Bitcoin does not pollute more than banks or other industries.

Bitcoin and price volatility

However, it is also normal that the International Monetary Fund, whose aim is to promote monetary cooperation around the world, cannot be one hundred percent enthusiastic about something as decentralized as the BTC.

But above all, what the IMF seems to be emphasizing is its fear of Bitcoin volatility and, in fact, the note goes on to talk about “massive fluctuations in the prices of cryptoassets”.

Source: cryptonomist

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