Reserve Bank sceptical as Bitcoin surpasses value of NZ economy

The Reserve Bank remains sceptical of digital currency 'Bitcoin', which continues to rocket in value, this week surpassing the value of the New Zealand economy.

Bitcoin has seen unprecedented growth in 2017. This week the value of one coin peaked at $NZ25,000, before it fell and then recovered at the $21,000 mark.

Acting Reserve Bank Governor Grant Spencer believes the surge is a sign of a bubble forming.

"We've seen them in the past. Over the centuries we've seen bubbles and this appears to be a classic case," he says.

But a number of Kiwi businesses have started trading in bitcoin, including a video game arcade in Blenheim, where gamers can now buy tokens with their virtual money.

Arcadia Blenheim manager Adam Scoon believes Bitcoin is "the future of money" and says introducing it to the store was a no-brainer.

While a relatively simple process, retail transactions are still a novelty in New Zealand.

However, investing in the currency is growing more popular in the country.

"Anyone can buy and trade bitcoin quite easily now, if you have a bitwallet, you can go to an exchange so lots of Kiwis are doing that and they're getting on that speculative wagon at the moment as the price goes up," says Science Media Centre Director Peter Griffin.

Mr Spencer isn't writing off digital currencies completely and says they are "a real serious proposition for the future" but may come in a different form than Bitcoin.

"Bitcoin is to me very much like gold. It's mined, it has a fixed quantity and its price is very volatile," Mr Spencer says.

Firms are unfazed as the Reserve Bank's acting governor warns the virtual currency looks like a bubble. Source: 1 NEWS