Wang Yongli: Bitcoin can only be a virtual asset and cannot replace legal tender

Recently, El Salvador announced that it would use Bitcoin as its legal tender. Some small countries that originally did not have their own currency and had always used the pound or the US dollar as their legal tender also expressed similar enthusiasm. This caused a great shock in society, especially for people in the currency circle.

In fact, these small countries without their own sovereign currencies have had fantasies about cryptocurrencies a few years ago and have tried to launch their own cryptocurrencies. In 2018, Venezuela also claimed to have launched the "Petro" using Ethereum encryption technology, but this is actually unrealistic.

The so-called decentralized "cryptocurrency" such as Bitcoin, whose total amount and periodic increments are completely locked by the system and cannot be adjusted according to changes in trading wealth, not only has its own operating efficiency too low, but more importantly, it fundamentally violates the development logic and laws that currency must inevitably transform from physical currency to credit currency. It cannot become a real circulating currency, it cannot subvert or replace sovereign (legal) currency, but can only be a special virtual asset or virtual commodity.

It is obvious that these countries lack the most basic understanding of currency (of course, they do not have their own sovereign currency). Using completely decentralized digital crypto assets such as Bitcoin as legal tender will seriously disrupt economic and social operations due to its own price fluctuations. The country has no means of regulation (this is not like using the currencies of major countries such as the British pound or the US dollar, which still have a certain degree of regulation by the monetary authorities). If this is true, it can only be a dead end.

Just because El Salvador announced that it would use Bitcoin as legal tender, people thought that the prophecy of cryptocurrency becoming legal tender had finally come true, and that this was a major historical moment for Bitcoin or cryptocurrency. In fact, just like the Venezuelan "Petro", expectations were too high. There is no future for using crypto assets such as Bitcoin as legal tender!