Larry Summers: Bitcoin has potential ‘to be a very, very important development’

Former United States Treasury Secretary and Federal Reserve Chair candidate Larry Summers sat down with Morning Money during the National Association for Business Economics policy conference and the former Obama administration official was asked about bitcoin. His answer was a positive one, a surprise considering that most of his peers have been dismissive of the digital currency.

According to Summers, the virtual currency “has the potential to be a very, very important development.” He explained that different sectors of the economy are changing because of information technology and noted the exorbitant fees an individual has to pay to use a debit card or access their money at an ATM is still in existence.

BitcoinThis is why he isn’t surprised that the private sector has developed some kind of technology to diminish the fees that come with financial transactions. Summers says the attempts will consist of different elements “and certainly Bitcoin is an innovative approach in that regard.”

“I am very mindful that there have been other things that came out of Silicon Valley that seemed very flakey to people on the outside and then proved to be an enormous deal,” said Summers. “Very serious economists thought that the Internet was going to be no more important than the fax machine so I’m not willing to dismiss Bitcoin. At the same time, I do think it’s important to recognize that it can’t and won’t flourish as a way of avoiding legal protections.”

This is one of the first policy officials to somewhat endorse bitcoin. Bitcoin hasn’t been able to garner support from some of the biggest names in politics and business, including JPMorgan Chase CEO Jamie Dimon, former Federal Reserve Chair Alan Greenspan and Berkshire Hathaway Vice-Chairman Charlie Munger.

With a growing number of esteemed officials jumping on the bitcoin train, it remains to be seen if bitcoiners themselves remain on that locomotive. With the news of Mt. Gox apparently offline and the value decreasing below $500, will bitcoin investors stay with the cryptocurrency?

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