Stephen Poloz
Mar 16, 2021
Trading in cryptocurrencies – such as bitcoin, ether and nano – has recently surged in popularity, thanks to a steep increase in the going rate for bitcoin: from about $9,000 per coin a year ago to a high of $58,000 in February 2021. Some investors consider cryptocurrencies the way of the future, while other financial observers caution against the speculative nature of investments like bitcoin. In an article on the CBC News website, journalist Reid Southwick offers an in-depth look at both sides of the crypto debate, interviewing a range of industry participants, from a self-described “bitcoin banker,” to a market analyst with a currency trading company. One of the experts that Southwick consults is Osler Special Advisor and former Governor of the Bank of Canada, Stephen Poloz. In the article, Stephen takes issue with the argument that cryptocurrencies should be considered an alternative to government-issued currency.
“Even the pros who deal in bitcoin often use the word ‘bet’ rather than ‘invest,’ which suggests in our minds it’s sufficiently volatile; it really is close to gambling as opposed to actual investment, since the asset itself has no intrinsic value,” Stephen said.
“But that doesn’t mean that it can’t become mainstream.”
He goes on to explain that the fact that the Toronto Stock Exchange recently listed two bitcoin exchange-traded funds should be seen as an important step as it means that “investors can put money into bitcoin under a regulated system of controls.” That said, he argues that bitcoin transactions take too long to process and there’s no fundamental value behind the coins – which leaves the price susceptible to fluctuations.
“Would you appreciate it if you agreed yesterday to buy a car paying in bitcoin and then you go to pick it up today and it cost you 16% more today than yesterday?” he said. “That’s not the kind of volatility that you can endure in something that is being used for payments.”
Learn more by reading Reid Southwick’s full article, “Why the rise of bitcoin could be the first shot in a currency revolution,” from March 6, 2021 on the CBC News website.