Bubble on Bitcoin will burst with no intrinsic currency value - Greenspan

By Rizza Sta. Ana

Dec 05, 2013 01:23 AM EST

In a Bloomberg Television interview today from Washington, Former Federal Reserve Chairman Alan Greenspan said the high trading prices of the Bitcoin could not be sustained and that the virtual currency is not really money.

Greenspan said, "It's a bubble. It has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of Bitcoin is. I haven't been able to do it. Maybe somebody else can."

Originally existing as a software, the unregulated virtual currency clocked in a record USD1,124.76 on November 30. According to Bloomberg, Bitcoin has rallied due to the increasing interest from investors and the growing acceptance of merchants as official payments for products and services. Moreover, Bitcoin has held the interest of US officials, with some federal officials claiming that payments via Bitcoin could be a legitimate form of exchange.

Acting assistant attorney general Mythili Raman at the US Justice Department's criminal division told the Committee on Homeland Security and Governmental Affairs, "We all recognize that virtual currencies, in and of themselves, are not illegal."

Greenspan added, "I do not understand where the backing of Bitcoin is coming from. There is no fundamental issue of capabilities of repaying it in anything which is universally acceptable, which is either intrinsic value of the currency or the credit or trust of the individual who is issuing the money, whether it's a government or an individual."

Bitcoin tracker website Bitcoincharts said there are around 12 million Bitcoins circulating in trading. In a US Senate committee hearing about the virtual currency, Fed Chairman Ben Bernanke said the central bank has no plans regulate virtual currencies.

Bernanke said in his letter to US lawmakers, "Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market."

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