As an analyst with over three decades of experience in the financial industry, I find Peter Schiff’s skepticism towards Bitcoin‘s potential to solve the US national debt compelling, although not entirely unexpected. With a background in economics and a keen eye for market trends, Schiff has consistently been a vocal critic of speculative assets, including Bitcoin.
A renowned economist disagrees with Bitcoin supporters who claim that cryptocurrency could someday solve the national debt of the United States.
Economist Peter Schiff voiced his doubts about the claim made by what he referred to as “Bitcoin enthusiasts” that 1 million Bitcoins could be used to pay off a nation’s total debt, arguing that even with such a large quantity of cryptocurrency, it would still fall short in dealing with the massive government debt.
Not Enough To Pay US Debt
According to Schiff, suggesting that 1 million Bitcoins could cover the U.S. national debt is implausible, as this would require Bitcoin’s market capitalization to surge by an extremely high and unrealistic percentage of over 20,000%.
“#Bitcoin pumpers claim that if the U.S. buys 1 million Bitcoin, someday we will be able to use that Bitcoin to pay off the National Debt,” Schiff said in a post.
He explained that 1 million coins of the firstborn cryptocurrency would not be adequate to settle the country’s massive debt of around $36 trillion.
#Advocates of Bitcoin suggest that if the U.S. were to acquire one million Bitcoins, it could potentially use them in the future to settle its current debt of $36.25 trillion. However, for this amount of Bitcoin to match today’s national debt, the total market capitalization of Bitcoin would have to be a staggering $761 trillion – six times larger than the world’s combined Gross Domestic Product (GDP)!
— Peter Schiff (@PeterSchiff) December 13, 2024
Presently, each Bitcoin is valued at around $102,286. Therefore, if you had a million Bitcoins, their total value would exceed $102 billion – an impressive sum, yet relatively small compared to the massive national debt of approximately $36.25 trillion.
According to the economist, Bitcoin achieving such a significant event is possible only if its total market value increases more than 20,000 times its current value. The economist seems skeptical that Bitcoin can grow at such an extremely rapid pace.
“For 1 million Bitcoin to equal today’s $36.25 trillion National Debt, Bitcoin’s market cap would be $761 trillion, 6x larger than world GDP,” he said.
Government Debt Keeps On Growing
According to Schiff, it’s highly unlikely that the total value of Bitcoin would increase by over 2000 times its current value, thus making it impossible for Bitcoin to pay off the U.S. national debt.
The economist pointed out that if Bitcoin’s market cap ever reached an astronomical $761 trillion, the national debt would similarly increase, with the economist noting, “In such a scenario, the national debt would exceed $36.25 trillion, implying a significantly higher price for Bitcoin would be necessary to cover it off.
He added that if the crypto’s market capitalization becomes too high, it is highly likely that its price will fall, which would not be a good cue for traders.
As an analyst, I posit that the U.S. debt doesn’t remain static but instead escalates year after year. This is due to the fact that the federal government consistently takes on new debt annually. This ongoing borrowing ensures that the national debt will continue to expand each year, making it increasingly challenging for Bitcoin, or any other entity for that matter, to address the U.S.’s growing financial obligations.
Not Yet A Global Currency
Schiff questioned if Bitcoin would be adopted at a global scale like fiat currencies, noting that even though BTC’s prices have soared, the crypto has not yet been used as a global currency.
“There will not be global adoption. So far very few people have adopted it at all,” Schiff remarked.
A number of nations acknowledge Bitcoin as their primary currency, but numerous governments remain skeptical about cryptocurrencies potentially supplanting traditional currencies.
“Bitcoin is a speculative asset, and its value is driven by hope, not real demand,” he said.
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2024-12-15 23:12