China's Central Bank Rocks Bitcoin; Says 'Not a Currency'

Oops, He Did it Again!... Greenspan Calls Bitcoin a 'Bubble'

Former Federal Reserve Chairman Alan Greenspan, best known for his "irrational exuberance" statement in the late 1990's, said he see another bubble forming... Bitcoin.

Greenspan told Bloomberg Television's Trish Regan and Adam Johnson on "Street Smart" today that "I guess" Bitcoin is a bubble. He said, "the question is I do not understand where the backing of Bitcoin is coming from Individuals with very high net worth and who have great reputations could create their own currency because people would be willing to exchange their checks with others probably at par. That is not the case with Bitcoin."

Greenspan on whether Bitcoin is a bubble:

"I guess so. Let me say that currencies to be exchangeable have to be backed by something. When we had when we were on the gold standard, gold and silver had intrinsic value and people would be willing to exchange their goods and services for gold or silver and wouldnt ask any questions of where the monies came from. Alternatively, when we went into currencies, it was the backing off the issuer of the currency. In other words, if some individual had great credit standing, his checks could circulate as money. But the question is 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 its a government or an individual. Individuals with very high net worth and who have great reputations could create their own currency because people would be willing to exchange their checks with others probably at par. That is not the case with bitcoin."

On whether Bitcoin could be the new gold:

"No. Well, see that it has to it has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of bitcoin is. I havent been able to do it. Maybe somebody else can. But if you asked me is this a bubble in bitcoin. Yeah, it's a bubble."

On what has changed with investors' perception about gold this year:

"Well first of all, remember we used to be at $35 an ounce. And then even several years ago we were well under $1,000 an ounce now were $1,200 or thereabouts. And to be sure, weve come down a bit but its after a very significant rise. So the issue here is that the... More