UBS Chief Economist: Cryptocurrency May Never Be Used as Actual Currency

Cryptocurrencies may never be used as actual money, according to UBS Global Wealth Management. UBS GWM chief economist Paul Donovan said in a video this week that a "fundamental flaw" inherent in cryptocurrencies is that in most cases the supply cannot be reduced when demand falls.

That means they can’t be considered money, he said. Donovan said a “proper currency” can be a stable store of value. That confidence comes from the ability of central banks to reduce supply when demand falls. There is no such mechanism to shut down the supply of most cryptocurrencies, so their value slides — resulting in a loss of spending power.