"The idea that these virtual currencies are ever going to compete with the dollar is hard to fathom," the head of the Minneapolis Federal Reserve says.
Bitcoin is not for serious investors, the head of the Minneapolis Federal Reserve said Thursday.
"If you live in any modern advanced economy, I would stick with the dollar, I would stick with the yen and leave bitcoin for the, you know, toy collectors," Minneapolis Fed President Neel Kashkari said during a town hall meeting in Pierre, South Dakota.
Bitcoin surged 2,000 percent in just 12 months to above $19,000 in December, drawing the attention of Wall Street and increasing speculation that cryptocurrencies may one day be a new asset class. The world's largest futures exchange, CME, and its competitor, Cboe, launched bitcoin futures trading in December.
Due to increasing transaction fees and longer confirmation times, bitcoin has also become less effective as a means of commerce. The cryptocurrency has also rapidly plunged from its record high, briefly dropping below $6,000 this week.
"I don't really think of bitcoin as a currency. I think of it as a novelty. The idea that these virtual currencies are ever going to compete with the dollar is hard to fathom," Kashkari said. He said that although bitcoin itself may be scarce like gold, "the problem is the barrier for entry for anybody creating another version of bitcoin is zero."
Kashkari did acknowledge that in countries with less political stability, such as Venezuela, a virtual currency not tied to the government could be attractive.
Bitcoin traded up about 8 percent by midday Thursday.