2017.12.1023:09:00UTC+00RBNZ’s Spencer Warns About Bitcoin’s Bubble Qualities, Instability

Reserve Bank of New Zealand Acting Governor Grant Spencer warned that Bitcoin's remarkable rally looks like a speculative bubble and its instability makes it unuseful in the future.

The New Zealand central banker said that the bitcoin is looking 'remarkably like a bubble forming'. He said that there have been bubbles over the centuries, but bitcoin looks like a classic case. He also warned that with such a bubble, there is no telling how far it will go before it drops.

So far this year, the cryptocurrency has surged more than 1,500 percent and around 85 percent in just the last two weeks, as people clamber to acquire the digital currency on hopes that it will be a widely-accepted and legitimate alternative to gold or traditional cash. Trading in bitcoin futures starts this week.

Spencer said that in his view, bitcoin is highly similar to gold, which also has to be mined, has a fixed quality and the price is very volatile.

RBNZ is currently doing research on the demand for the kiwi or the New Zealand dollar and whether it would be possible at some point in the future to replace the currency with a digital alternative, however, Spencer said that bitcoin should not a basis for this scenario. He said that given bitcoin's lack of stability, it would not be useful.