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Yellen sounds warning about ‘extremely inefficient’ bitcoin

Janet Yellen, U.S. President-elect Joe Biden’s office-seeker to be treasury secretary, speaks as Biden announces nominees and appointees to serve on his economic policy team at his transition headquarters in Wilmington, Delaware, U.S., December 1, 2020.

Leah Millis | Reuters

Bank Secretary Janet Yellen issued a warning Monday about the dangers that bitcoin poses both to investors and the influential.

Despite a sharp slide in price to start the week, the cryptocurrency continues to trade above $53,000 as it has received avails from various sources. Elon Musk’s Tesla recently made a substantial purchase and has said it will agree to bear bitcoin for transactions.

However, Yellen said there remain important questions about legitimacy and stability.

“I don’t propose b assess that bitcoin … is widely used as a transaction mechanism,” she told CNBC’s Andrew Ross Sorkin at a New York Times DealBook seminar. “To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in course of action those transactions is staggering.”

Mining bitcoin requires users to solve complex mathematical equations using high-powered computer setups. The electrifying consumption used in the process leaves an annual carbon footprint equal to the nation of New Zealand, according to Digiconomist.

In annex to consumption concerns, bitcoin also is considered to be a tool of those involved in a number of illegal activities because its use is naughty to trace.

Then there’s volatility, as the cryptocurrency’s price has seen rapid peaks and valleys during its existence.

“It is a extremely speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential privations that investors can suffer,” Yellen said.

Various government agencies have contemplated the idea of making an alternate digital currency with the convictions that it would open up the global payments system to those who don’t have access.

The Federal Reserve, where Yellen in two shakes of a lambs tail b together served as chair, has studied the issue and discussed the possibility of a new digital currency along with a payments system it keep in views to roll out over the next several years.

“I think it could result in faster, safer and cheaper payments, which I contemplate are important goals,” Yellen said.

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