The Bank of England’s Deputy Governor has compared the recent crypto crash to the dotcom bubble more than two decades ago.
Jon Cunliffe said those that survived the crash could become the technology companies of the future and rival the likes of tech giants Amazon.
“The analogy for me is the dotcom boom, when $5 trillion was wiped off,” he said at the Point Zero Forum in Zurich today, according to a Bloomberg report. “A lot of companies went, but the technology didn’t go away. It came back 10 years later, and those that survived, the Amazons and the eBays, turned out to be the dominant players.”
Cunliffe said he expected cryptocurrencies to remain and said, “it has the possibility of huge efficiencies and changes in market structure.”
In the dotcom bubble, the Nasdaq surged 400 per cent between 1995 and 2000 as new internet-related companies aimed to make money from the new technology. It peaked in 2000 and by October 2002, the Nasdaq had lost 78 per cent of its value, about $5 trillion.
The Bank of England is also researching its own potential Central Bank Digital Currency (CBDC) and is expected to provide a consultation paper on it this year.
A key issue being considered is whether to produce a totally independent CBDC with an “on or off ramp to fiat” money or something “flexible enough” to be used in private stablecoins.