In an interview with CNBC at the Consensus 2018 conference in New York, Bullard identified several positive aspects of using bitcoin.
The biggest positive of using the cryptocurrency is that it has very low costs when it comes to trade.
He pointed out that cryptocurrencies like bitcoin may have allowed for trade that would otherwise not exist due to its exceptionally low costs. While some of this is illegal trade, a lot of trade is legal and is happening only because of the low charges associated with bitcoin.
When asked about the possibility of bitcoin becoming a threat to the US dollar, he said it is hard to predict the future but there are chances that bitcoin could challenge the US dollar in the future.
In a statement, Bullard said,
My idea is that there’s a lot of currency competition going on right now. The dollar has been the winner historically because it’s backed by the largest economy and a relatively stable policy in terms of low inflation and that’s going to be tough to beat. But a lot of people here want to beat it.
Bullard was a lot more confident regarding the blockchain technology that provides the infrastructure for bitcoin. According to him, the Fed thinks that blockchain technology has a lot of potential and is observing its development with great interest.
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Non-Committal Over Fed Backed Cryptocurrency
Bullard was non-committal about the rumors that the Fed was planning to issue its own cryptocurrency. He did admit that the Fed is looking at the possibility and has different departments looking into the potential use of blockchain technology but said there are no solid plans at the current time.
There are some cryptocurrency experts who believe that bitcoin could soon challenge the US dollar as it becomes more accessible across the world. Wall Street exchanges like Nasdaq have also come out in support of crypto in recent times with CEO Adena Friedman saying that Nasdaq would love to trade in crypto as soon as the Securities and Exchange Commission has it regulated. The parent company of the New York Stock Exchange recently announced that it is in the process of developing an online platform to allow trade in cryptocurrencies.