(Bloomberg) -- Cryptocurrencies may never be able to work as actual currencies, according to UBS Global Wealth Management.
The “fundamental flaw” inherent in cryptocurrencies is that supply can’t be reduced when demand is slumping in most cases, Paul Donovan, chief economist at UBS GWM, said in a video this week. That means they can’t be considered currencies, he said.
A “proper currency,” as Donovan termed it, can be a stable store of value, providing certainty that it will be able to buy the same basket of goods tomorrow as it buys today. That confidence is derived from central banks’ ability to reduce supply when demand is falling. There is no such mechanism for switching off supply on most cryptocurrencies, and therefore their value can slide -- leading to a collapse in spending power.
“People are unlikely to want to use something as a currency if they’ve got absolutely no certainty about what they can buy with that tomorrow,” Donovan said in the video.
Read More: UBS Wealth Warns Clients Crypto Prices Can Actually Go to Zero
Bitcoin futures are listed on the Chicago Mercantile Exchange alongside contracts for most major currencies, but the difference in daily trading volumes suggest that some investors haven’t yet embraced the crypto as a fully fledged currency. Amid the 11% price plunge for Bitcoin on Thursday transactions for the January futures were just above 13,000, while there were around six times as many for Japanese yen futures.
Últimas Noticias
Debanhi Escobar: they secured the motel where she was found lifeless in a cistern
Members of the Specialized Prosecutor's Office in Nuevo León secured the Nueva Castilla Motel as part of the investigations into the case
The oldest person in the world died at the age of 119
Kane Tanaka lived in Japan. She was born six months earlier than George Orwell, the same year that the Wright brothers first flew, and Marie Curie became the first woman to win a Nobel Prize
Macabre find in CDMX: they left a body bagged and tied in a taxi
The body was left in the back seats of the car. It was covered with black bags and tied with industrial tape
The eagles of America will face Manchester City in a duel of legends. Here are the details
The top Mexican football champion will play a match with Pep Guardiola's squad in the Lone Star Cup
Why is it good to bring dogs out to know the world when they are puppies
A so-called protection against the spread of diseases threatens the integral development of dogs
