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2/8/2018, 1:01 PM (Source: TeleTrader)
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ECB's Mersch: Bitcoin is insubstantial but risky

Yves Mersch, member of the Executive Board of the European Central Bank, said cryptocurrencies or virtual currencies bring "risk of negative impacts on the economy" as they grow. He compared them to a mirage and "bubbles of marsh gas ā€“ insubstantial and foul-smelling, but also flammable and sometimes able to burn things around them." Speaking in London on Thursday, the policymaker argued the asset class doesn't have characteristics of money, including being a medium of exchange, a unit of account and a store of value.

"With recent network congestion, the average time for one confirmation can easily exceed several hours. At these speeds, if you bought a bunch of tulips with Bitcoin they may well have wilted by the time the transaction was confirmed," he said in an apparent reference to the so-called Tulip mania from the 17th century, the first so-called speculative bubble.

However, Mersch acknowledged the potential of the technology underlying virtual currencies. "Indeed, the hot air is already escaping from some of these bubbles. But just because the initial euphoria and hype subsequently fade, it does not mean that the innovation is without virtue, even if early market leaders may not last the distance," he stated.

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