Why I‘m so skeptical about bitcoin – Axel Weber, UBS chairman

Another top banker has expressed scepticism about bitcoin fulfilling important functions of currency.

Axel Weber, UBS chairman and former Bundesbank President, said on Wednesday bitcoin does not fulfil some of the most important functions of currency, according to reports by Reuters.

Weber thus becomes the latest senior banker to express scepticism about the cryptocurrency.

“I get often asked why I‘m so skeptical about bitcoin, it probably comes from my background as a central banker,” Weber said at a conference organized by the Swiss Finance Institute.

“The important functions of a currency are: it’s a means of payment, it has to be generally accepted, it has to be a store of value and it’s a transaction currency,” he noted, adding that bitcoin is only a transaction currency.

Weber’s comments follow Jamie Dimon’s, JPMorgan Chase & Co chief executive who last month said bitcoin “is a fraud” and will blow up.

However, Weber was more upbeat about blockchain, which was first developed to power bitcoin and is a shared ledger of data that is maintained by computers rather than a central authority, and said over time the idea of a digital ledger would be widely accepted.

Earlier Wednesday, Commerzbank AG, Bank of Montreal, Erste Group Bank AG and CaixaBank SA said they had joined an initiative launched by UBS and IBM Corp aimed at building blockchain-based technology to support trade finance transactions.

Bitcoin is a digital currency that enables individuals to transfer value to each other and pay for goods and services bypassing banks and the mainstream financial system.

While banks have largely steered clear of bitcoin since it emerged following the financial crisis, the virtual currency has a range of supporters, including technology enthusiasts, libertarians skeptical of government monetary policy and speculators attracted by its price swings.

In Nigeria, the cryptocurrency is getting some measure of attention as a bitcoin exchange service named Bitkoin Africa has been launched and it is up and running.

Bitkoin.Africa, according to its promoters, seeks to provide legitimate trading opportunities for local cryptocurrency holders in Nigeria and on the continent.

The platform boasts an automated escrow service and the ability to buy Bitcoin using Visa and MasterCard.

The service thus come as a relief to local holders of the cryptocurrency who have been sidelined by spurious regulatory warnings from both the Central Bank of Nigeria (CBN) and the Securities Exchange Commission (SEC). Both regulators have publicly come out to discourage transactions in cryptocurrency.