Swiss private bank, UBS, issued a statement saying that all the cryptocurrencies, such as bitcoin are speculative bubbles. At the same time, the bank said it was highly improbable that the cryptocurrencies would ever convert to a common currency. The bank supports the blockchain technology and says it could have a significant impact on many industries. Moreover, the UBS bank announced last month the development of its own blockchain tool to support its financial operations.
In an article published on the bank’s website and wrote by Paul Donovan, the bank says: “We believe that the strong rise in the value of cryptocurrencies in the recent months is a speculative bubble”.
The bank has doubts that the cryptocurrencies would ever convert into a conventional payment method. The biggest obstacle in this process of being widely accepted, according to UBS, is the necessity for the companies and individuals to pay their bills in a currency issued by the state, along with the potentially unlimited supply of the encrypted money.
Bubbles start when new things appear in the economy. This, in turn, creates uncertainty in the real world. Like many before UBS, the bank speaks about the tulip bubble in the 17th century, the bubbles of Mississippi and the South Sea from the 18th century and the dotcom bubble in the nineties. According to them, the cryptocurrencies fall in the same category as the aforementioned bubbles.
The cryptocurrencies are relatively new on the market. Benefits in the real world normally need years to materialize and the relatively high volume of trading with cryptocurrencies, along with their limited use in the real world, suggests that many buyers are trying to achieve speculative profits, without the intention to use cryptocurrencies for transactions in the real world.
At the beginning of October, the general director of the UBS bank, Sergio Ermotti, said that the rich investors were curious about the digital cryptocurrency market, but they were not ready to invest significant amounts of money in this type of currencies. We heard something similar from Jamie Dimon, the CEO of JP Morgan Chase, who called bitcoin a fraud.
On the other hand, the UBS bank sees the blockchain technology as something positive and thinks it will generate a significant impact on numerous industries, such as finance, manufacture, public services, healthcare, etc. The bank estimates the use of the blockchain technology could generate up to 300 to 400 billion dollars until 2027.