“They have no intrinsic value. That doesn’t mean to say people don’t put value on them, because they can have extrinsic value. But they have no intrinsic value,” Bailey said.
“I’m going to say this very bluntly again,” he continued, “buy them only if you’re prepared to lose all your money.”
Mr Bailey’s comments come as Dogecoin, a cryptocurrency styled after on the Shiba Inu breed of Japanese dog, has risen more than 100 times faster than Bitcoin, while another cryptocurrency Etherium recently hit record highs.
Many of these cryptocurrencies have been promoted by celebrities, including SpaceX and Tesla CEO Elon Musk. Mr Musk’s controversial tweets regularly push the price of the cryptocurrency higher, as he shares memes about the asset ahead of his appearance as a “dogefather” on the sketch show Saturday Night Live.
However, the Bank of England does not seem totally averse to cryptocurrencies. Alongside the Treasury, it is apparently working to assess the benefits of a central digital currency that could commonly be known as “Britcoin”. By the end of the decade, it is expected that only one in 10 payments in the country will be made with traditional paper or metal currency.
“Our vision is for a more open, greener, and more technologically advanced financial services sector," chancellor Rishi Sunak said at the time.
"If we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s preeminent financial centre.”
The Bank of England also came together in January 2021 with the central banks of Japan, Sweden, Switzerland, and the eurozone to look at the economic benefits of digital currencies. Those within the cryptocurrency industry believe it indicates regulators are seeing the potential windfalls of the digital coins.
The headline of this article was amended on 27 May 2021. It previously said investors ‘will’ lose all their money, but Mr Bailey merely said that investors should only buy cryptocurrency if they are prepared to lose all their money.