Bank of Mexico Governor says #Bitcoin More like Precious Metal than Legal Tender, But Sweden’s Sees Eventual “Collapse”

Meanwhile, to billionaire investor Leon Cooperman, Bitcoin doesn’t make “a great deal of sense” because he’s old, not to mention he’s a “paper guy.”

Riksbank Governor Stefan Ingves compared buying and selling bitcoin to trading stamps and questioned its staying power without the government's backing.

“Private money usually collapses sooner or later,” said the governor of Sweden’s central bank at a banking conference in Stockholm.

“And sure, you can get rich by trading in bitcoin, but it’s comparable to trading in stamps.”

Ingves said earlier this year that cryptos are unlikely to escape regulatory oversight as they rise in popularity.

Much like Ingves, billionaire investor Leon Cooperman is skeptical of the leading cryptocurrency, which doesn’t make “a great deal of sense.”

“I say that if you don't understand bitcoin, it means you're old. I'm 78. I'm old. I don't understand it,” he said on CNBC.

Gold is a “better” store of value than Bitcoin if one is nervous about the world, as per Cooperman. But he doesn’t own much bullion either as he's a “paper guy” and “a perennial optimist.”

According to the hedge fund manager, it isn’t in the US government's interest to make way for a substitute to the dollar either, “My guess is I'd be very careful in bitcoin,” he said.

Evolved Fiat Money

But unlike Ingves and Cooperman, the chief of Bank of Mexico believes, Bitcoin is more than just money; in fact, it is a means of barter that is an “evolved” version of fiat money.

On Thursday, Governor Alejandro Diaz de Leon called Bitcoin a high-risk investment and a poor store of value.

According to him, receiving Bitcoin in exchange for a good or service is more like bartering because there isn’t really the exchange of money for a good, but the person is actually exchanging a good for a good.

“In our times, money has evolved to be fiat money issued by central banks.”

“Bitcoin is more like a dimension of precious metals than daily legal tender.”

According to the head of the apex bank, for a cryptocurrency to be considered money, it must be a reliable payment method and safeguard its value, pointing to its high volatility where it fluctuates 10% from one day to another.

“You don't want that volatility for purchasing power. In that sense, it is not a good safeguard of value.”

Saving Millions of Dollars

The Banxico boss’s comments on Bitcoin came the same week that another LATAM country, El Salvador, officially adopted Bitcoin as a legal tender alongside the US dollar. Another country, Panama, is moving to embrace digital currencies as well.

As we reported, EL Salvador, whose 70% population doesn’t have a bank account, became the world’s first nation to adopt Bitcoin to increase financial inclusion and cut down on the high cost and inefficiencies involved in remittances.

Last year, El Salvadorians living abroad transferred nearly $6 billion home, about 25% of the country’s GDP. But a chunk of this goes to the middleman facilitating these international transfers.

El Salvador President Nayib Bukele estimates that MoneyGram and Western Union will lose $400 million a year in commission for remittances should bitcoin adoption scales.

According to Mario Gomez Lozada, who worked as a banker with Merrill Lynch and Credit Suisse and now runs a crypto derivatives exchange, this figure will be closer to $1 billion.

Remittances are a major support for Mexico's economy, which rose to their highest-ever level in February 2021 since records began in 1995. Remittances to Latin America’s second-largest economy in February recorded $3.174 billion and totaled $40.61 billion last year, according to central bank data.

This means Mexico can gain immensely if it decides to adopt Bitcoin and cryptocurrencies like other countries in the region.

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