Bitcoin and the cryptocurrency craze has been met with scepticism by institutional investors and central banks, with legendary billionaire investor George Soros the latest to issue a warning about the mania.
Speaking at the World Economic Forum in Davos, he said: “Well cryptocurrency is a misnomer.
“It’s a typical bubble which is always based on some kind of misunderstanding.
“Bitcoin is not a currency because a currency is supposed to be a stable store of value.
“And a currency that can fluctuate 25 percent in a day can’t be used, for instance, to pay wages because wages could drop by 25 percent in a day.
“It’s a speculation based on misunderstanding.”
The pessimism by mainstream financial institutions has not stopped the digital currency from rocketing in price the last few months.
Bitcoin detractors were served a fresh round of ammunition on Wednesday after Goldman Sachs confirmed all concerns about the instability of the virtual token.
Goldman Sachs’ analysts have compared bitcoin’s growth to the disastrous 17th-century tulip mania, saying the situation has now moved beyond “bubble levels”.
The investment group pulled no punches insisting it does not believe the currently reigning cryptocurrencies will hold onto their values in the long run.
Goldman Sachs wrote in a statement: “The price moves in cryptocurrencies and in the share prices of companies with new cryptocurrency or blockchain affiliations reminds us of a comment made by a Dutch historian, Theodorus Schrevelius.
“He wrote, in 1648, 11 years after the collapse of tulip prices, that ‘our descendants doubtless will laugh at the human insanity of our Age, that in our times the tulips had been so revered'.”
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