US economist Brian Wesbury shared his thoughts on what would happen if the masses ditch fiat currencies and embrace bitcoin instead. He discussed whether the government would allow this to happen and how bitcoin can become a real currency.
Economist Brian Wesbury answers question about masses abandoning Fiat currencies for Bitcoin
Brian Wesbury is an economist specializing in macroeconomics and economic forecasting. He is currently Chief Economist at First Trust Advisors, a financial services company headquartered in Wheaton, Illinois.
He was asked last week on Fox Business News what would happen “if the masses gave up fiat money”, if it “would trigger a financial collapse” and “could bitcoin ever replace the dollar?” Wesbury began by recognizing:
A lot of people who buy bitcoin and other cryptocurrencies think they are going to replace the dollar.
He explained, “If they replaced the dollar, if you take all of M1 – that’s all checking accounts and cash – in the system, you divide it by all the bitcoin that can exist – $ 21 million. ‘between them – you end up with over $ 300,000 worth if it replaced the dollar. ”
However, he did raise a number of questions: “Will the government allow this to happen? Can you pay your taxes in bitcoin? Can you buy anything you want with Bitcoin? The economist was of the opinion:
This is what has to happen for you to have real currency … so it’s far from it.
The chief economist did not mention that a growing number of jurisdictions are already adopting bitcoin for paying taxes. For example, the canton of Zug in Switzerland announced that it would start accepting bitcoin for tax payments this year. Several other local governments in Switzerland made a similar announcement, such as Zermatt.
Recently, the mayor of Miami said he was working to authorize payments for the city’s services in bitcoin. In addition, a growing number of stores are accepting bitcoin payments. Payment giant Paypal, for example, plans to allow people to use cryptocurrency to pay for goods and services at 2.8 million merchants in its network this year.
Wesbury also claimed that bitcoin’s volatility was one of the issues. As an example, he said he jumped into his car with two bitcoins in his pocket. “When I got to the car dealership I wasn’t sure if I could buy two cars or a half car and that’s one of the issues with bitcoin.” He concluded:
It’s so volatile that we don’t really know what it’s worth.
However, many experts have argued that bitcoin’s volatility decreases with increasing adoption. Inigo Fraser-Jenkins of the Bernstein Alliance said in December that bitcoin’s volatility has declined significantly over the past three years, making it a more attractive store of value, and that its relative volatility both for the gold and stocks had fallen to all time lows. In July, BTC volatility hit its lowest level in three years. Additionally, billionaire investor Bill Miller said on Friday that bitcoin becomes less risky as the price increases.
Do you agree with Wesbury? Let us know in the comments section below.
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