Cryptocurrencies like Bitcoin comes with substantial risks and making them equal to the national currency is not an advisable shortcut, says IMF. On 29 August IMF shared a tweet linked with a blog post regarding the matter of cryptocurrencies.
The influence of Bitcoin and other stablecoins is increasing around the globe. Many countries like El Salvador, Cuba, and Honduras are going to equalize Bitcoin with their national currency. Recently, El Salvador and Honduras have installed the first Bitcoin ATM for the smooth operation of payments across the country. These steps are making IMF (International Monetary Fund) worried.
IMF has shared their concerns about how adopting Bitcoin as a national currency can be bad for them. They further said that they will not advise the countries to do so because of its risks.
Bitcoin comes with substantial risks. How?
The Blog post shared by the IMF backs up cryptocurrencies by saying that it has the potential to grow and many benefits like sharing money across the border. But It also warns about the price fluctuation of BTC in which one can lose all of his savings. It further gave an example of how Bitcoin went from $64K to $28k within weeks.
The blog post also shared their concerns about how cryptocurrency is fatal for macro-financial stability, investor protection, and the environment. Further added that:
Mined crypto-assets such as Bitcoin require an enormous amount of electricity to power the computer networks that verify transactions. The ecological implications of adopting these crypto assets as a national currency could be dire.
IMF, after pointing out that Bitcoin comes with substantial risk, suggests that governments should use new digital ways to provide financial stability, quality, and environmental sustainability. For more content click here.