Today, Federal Reserve Chairman Jerome Powell, in an exclusive interview with CNBC, said that Bitcoin is competing with gold, not the US dollar.
BREAKING: 🇺🇸 Fed Chairman Jerome Powell says #Bitcoin A competitor to gold, not the US dollar. pic.twitter.com/YQHFiThTBo
— Bitcoin Magazine (@BitcoinMagazine) December 4, 2024
“People use bitcoin as a speculative asset, it’s like gold,” Powell said.
“It’s just like gold, but virtual and digital. People don’t use it as a means of payment or a store of value. It’s very volatile. It’s not a competitor to the dollar, it’s a real competitor to gold,” he added.
While he seems to have stumbled over his own words, saying that no one uses Bitcoin as a store of value when that is literally one of its most prominent use cases today, I agree with his overall stance.
As an American living in America, I don’t feel that Bitcoin (BTC) is in competition with the US dollar today. Personally, I, along with many other Bitcoin users I know, try to store as much Bitcoin as possible, and use it as a store of value. When I spend Bitcoin (which I do every weekend when I buy beef at the farmers market) I’m not spending Bitcoin from my long-term savings. I take dollars from my bank account, buy Bitcoin on Cash App, and send Bitcoin directly to the farmer using the accelerator network. I feel like I’m spending dollars in my bank instead of the bitcoin I’m storing.
I would rather spend my dollars, an asset that is falling in value, and save my bitcoin, an asset that is rising in value. Since Bitcoin (BTC) is not widely accepted where I live, I need dollars in my daily life. I’m also incentivized to spend my dollars instead because I can also earn more bitcoins using bitcoin redemption rewards apps like Fold and Lolli.
I also prefer storing my wealth in Bitcoin than in gold. I don’t need gold, because I can’t spend it anywhere, and while it maintains its value against the dollar, it continues to lose value against Bitcoin year after year. It doesn’t make sense for me to carry gold. When it comes to rising prices, why would I choose to hold a loser when I know the winner will still outperform them?
I predict that the vast majority of Americans will choose the dollar over Bitcoin today when it comes to their medium of exchange. Bitcoin is not in competition with the dollar today. But when it comes to choosing a store of value, gold or Bitcoin, I think Bitcoin is the clear winner. Although Bitcoin’s market cap is still only a small fraction of gold’s market cap, I believe Bitcoin will still be seen as superior to gold. Whether Powell is aware of all the properties of Bitcoin, he is right that Bitcoin is viewed more strongly as a digital form of gold than as a new monetary mechanism for payments in the United States.
This article is a takes. The opinions expressed are entirely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.