American economist Brian Wesbury has shared his thoughts on what would happen if the masses dumped fiat currencies and adopted bitcoin instead. He discussed whether the government would allow it and how bitcoin can become a real currency.
Economist Brian Wesbury answers question about the masses dumping Fiat currencies for Bitcoin
Brian Wesbury is an economist with a focus on macroeconomics and economic forecasting. He is currently chief economist at First Trust Advisors, a financial services company headquartered in Wheaton, Illinois.
He was asked on Fox Business News last week what would happen “if the masses dumped fiat money,” whether it “caused a financial collapse” and “could bitcoin ever replace the dollar?” Wesbury began by acknowledging:
Many 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 the M1 – it’s all checking accounts and cash – in the system, you divide it by all the bitcoin that can exist – 21 million of them – you get more than $ 300,000 in value if it replaced the dollar. “
However, he asked a number of questions: “Will the government let that happen? Can you pay your taxes in bitcoin? Can you buy anything you want with bitcoin? The economist opined:
That’s what it takes to have a real currency … so it’s a long way from that.
The chief economist did not mention that a growing number of jurisdictions are already embracing bitcoin for tax payments. For example the canton Zug Switzerland announced it will accept bitcoin for tax payments this year. Several other local authorities in Switzerland have made a similar announcement such as Zermatt.
Recently, the mayor of Miami said he is working on allowing payments for city services in bitcoin. In addition, a growing number of stores are accepting bitcoin payments. Payments giant Paypalfor example, plans to let people use cryptocurrency this year to pay for goods and services at 2.8 million merchants in its network.
Wesbury also claimed that bitcoin’s volatility is one of the issues. As an example, he said he jumped in his car with two bitcoins in his pocket. “When I got to the car dealer, I didn’t know if I could buy two cars or half a car and that’s one of the problems with bitcoin.” He concluded:
It’s so fleeting that we don’t really know what it’s worth.
However, many experts have argued that bitcoin volatility is declining with increasing adoption. Alliance Bernstein’s Inigo Fraser-Jenkins said in December that bitcoin’s volatility has decreased significantly over the past three years, making it a more attractive store of value, and the relative volatility of both gold and stocks has fallen to historically low levels. In July, BTC‘s volatility hit a three years low. Additionally, billionaire investor Bill Miller said on Friday that bitcoin will be less risky the higher the price goes.
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