Neel Kashkari, the president of the Minneapolis Federal Reserve, slammed the cryptocurrency industry, saying it has become a “farce” due to unregulated chaos and escalating fraud.
Kashkari made the biting remarks at Bay College in Escanaba, Michigan, on May 21, where he expressed dismay at the proliferation of scams in the nascent crypto ecosystem.
“It’s a clever idea that some people came up with, but now it’s being taken to ridiculous extremes,” Kashkari said (see video, starting at 54:30). “The barrier to entry to creating a new cryptocurrency is zero.”
He added: “If you can dupe enough people to buy it, you can pretend that you’ve launched something. And you can say, ‘Look, I’m a billionaire because I sold you one. And I own the other 999 million of them, so that means I’m a billionaire! So it has become a farce…I’m seeing more noise and more fraud than I’m seeing anything useful.”
A Crypto Survival of the Fittest
Kashkari’s skepticism doesn’t mean he has no faith in the future of bitcoin or other cryptocurrencies, but moreso that he believes many will drop off through a natural thinning of the herd, as it were.
“Does that mean it’s always going to be a farce? No,” Kashkari said. “There will probably be a shakeout, and maybe a handful of these things will end up surviving.”
This is not the first time that Kashkari has trashed the crypto market. In January 2018, he dismissed bitcoin, saying the largest cryptocurrency by market cap poses no threat to fiat money because it lacks credibility.
“I don’t see bitcoin as a credible competitor to the dollar in the United States of America, and the reason is the barrier of entry to you creating your own coin and me creating my own virtual currency is zero,” he reasoned.
Blockchain, Not Bitcoin
Kashkari is part of the “blockchain, not bitcoin” movement of crypto skeptics who see little value in digital currencies but acknowledge the game-changing potential of blockchain, as CCN has reported.
“Blockchain and the underlying technology is probably more interesting and has more potential than maybe bitcoin does by itself,” Kashkari said in May 2017.
Kashari echoed the sentiments of John Williams, the president the Federal Reserve Bank of New York. Williams says cryptocurrencies cannot replace the U.S. dollar because they fail the basic test of what a currency should be.
“Cryptocurrency doesn’t pass the basic test of what a currency should be,” Williams said in April 2018. “[Currency is] basically something with a store of value [and bitcoin is not that].”
The harsh anti-crypto stances of the New York Fed’s John Williams and the Minneapolis Fed’s Neel Kashkari differ somewhat from their boss, U.S. Federal Reserve Chairman Jerome Powell, who urged caution but is not an avowed crypto skeptic, as CCN has reported.
“[I have] nothing against bitcoin,” Powell said in November 2017. “We generally look at some of the risks of cryptocurrencies associated with money-laundering and those sorts of issues, but we’re not broadly opposed or supportive of alternative currencies.”
Powell, who’s also of the “blockchain, not bitcoin” mentality, doesn’t believe the crypto market is big enough to pose a threat to the economy. “They don’t really matter today. They’re just not big enough,” he said.
Meanwhile, here’s a look back at some other tech predictions that blew up in skeptics’ faces over the years:
- 1876: “The telephone has too many shortcomings to be seriously considered a means of communication.” — William Orton, president of Western Union.
- 1995: “I predict the internet will soon go spectacularly supernova and in 1996, will catastrophically collapse.” — Robert Metcalfe, founder of 3Com.
- 2007: “There’s no chance that the iPhone is going to get any significant market share.” — Steve Ballmer, Microsoft CEO.
Featured image from Flickr/propublica.