- Royal Bank of Canada CEO, David McKay, is joining in calls to question the utility and legitimacy of bitcoin.
- "I think some people will call it a fraud. I don't think it's fraudulent … But it doesn't solve a main need in society right now," said McKay.
- Blockchain rather than bitcoin excites the CEO.
Now Royal Bank of Canada CEO, David McKay, is joining in calls to question the utility and legitimacy of bitcoin.
"The purpose it [bitcoin] seems to serve today is really to help move money in a hidden way and facilitate, potentially facilitate, criminal activity of moving money in an undetected way," McKay told CNBC in an episode of Life Hacks Live.
"I think some people will call it a fraud. I don't think it's fraudulent … But it doesn't solve a main need in society right now."
McKay doubts bitcoin's legitimacy in the face of the pound, euro or dollar.
"A currency is a promissory note on a future good and service and economy. I hold a dollar, or a pound, or a euro because I want to exchange it for physical good or a service sometime in the future and I'm confident in holding that note because of the political system backing it, because of the strength of the economy, because of a central bank with reserves."
"So when you look at those characteristics and the real need for a currency, how do you apply that to a cryptocurrency? Most of those criteria don't fit; it's not backed by a government, it's not backed by rule of law, it's not backed by economy, there's no reserve against it, you actually have to mine it in a distributed chain environment," said McKay.
Though bitcoin may "serve a need in the future" in reducing the friction in moving money, it's potentially illicit activity means it's in need of regulation, said McKay.
It's the technology underpinning bitcoin rather than the cryptocurrency itself that excites the CEO.
"Most people in the world aren't talking about bitcoin. They're talking about blockchain, the distributed ledger private or public that underpins the bitcoin application of it," said McKay.
"It has a chance to transform everything from our capital markets, and our trading businesses, our security settlement businesses, right into our retail franchise. And so that technology, that ability to work in code and build solutions, are two new technologies and areas that we need."
On the evolution of the banking sector, McKay sees a huge change already.
"When I grew up in banking we were like an enclosed industry. We built everything ourselves, we managed everything ourselves, we interacted one on one with the client."
"Today, banking is about partnerships with fintech, with technology companies, bringing in new ideas, building innovative solutions quickly, breaking them down and rebuilding them. It's a completely different industry," said McKay.
Life Hacks Live is a series produced by CNBC International for Facebook, where tomorrow's leaders get to ask some of the world's biggest influencers for advice. You can watch the full episode here.