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

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Wang Yongli believes that El Salvador’s passage of the Bitcoin Act does not mean that the prediction of “cryptocurrency becoming legal tender” has come true, and Bitcoin cannot become a real currency in circulation.

Original title: “Wang Yongli | Bitcoin as legal tender is pure fantasy”
Written by: Wang Yongli

Recently, El Salvador announced the use of Bitcoin as legal tender. Some small countries that have no national currency and have always used British pounds or U.S. dollars as legal tender have also expressed similar enthusiasm. This has caused a lot of shock in the society, especially the currency. People in the circle are very excited.

In fact, these small countries without their own sovereign currencies had illusions about cryptocurrencies a few years ago and tried to launch their own cryptocurrencies. In 2018, Venezuela also claimed to have launched a “petrocoin” using Ethereum encryption technology, but this is actually not realistic.

Bitcoin’s total amount and phased increments are completely locked by the system, and the so-called decentralized “cryptocurrency” that cannot be adjusted according to changes in trading wealth is not only too inefficient, but more importantly, it violates currency fundamentally. The development logic and law that must be transformed from physical currency to credit currency cannot become a real currency in circulation, cannot subvert or replace sovereign (legal) currency, but can only be a special virtual asset or virtual commodity.

Obviously, these countries lack the most basic knowledge of currencies (of course they do not have their own sovereign currencies). The use of fully decentralized digital encrypted assets such as Bitcoin as legal tender will inevitably disrupt economic and social operations due to its own price fluctuations. The country does not have any control measures (this is not like using the currency of major countries such as the British pound or the U.S. dollar. There is still a certain degree of regulation by the monetary authorities on its currency), if so, it can only be self-defeating.

Because El Salvador announced the use of Bitcoin as legal tender, it believed that the prophecy of cryptocurrency to become legal tender was finally fulfilled, and that this was a major historical moment for Bitcoin or cryptocurrency. In fact, it was just like the Venezuelan “petro currency”. Expectations are too high. There is no prospect for using crypto assets such as Bitcoin as legal tender!

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