A well-known economist disagrees with Bitcoin supporters who claim that the cryptocurrency could one day solve the US national debt.
Economist Peter Schiff expressed his opinion Doubt About the bold declaration of what he called “Bitcoin pumps” that 1 million Bitcoins could settle the country’s national debt, saying that even with that number of cryptocurrencies, it would still be insufficient to address the country’s massive government debt.
Not enough to pay off US debt
Schiff does not believe that 1 million Bitcoin is the answer to paying off the US national debt, arguing that to do so, cryptocurrencies would need to achieve an unrealistic increase of more than 20,000% in their market value.
“#Bitcoin pumpers claim that if the United States buys 1 million Bitcoins, we will one day be able to use those Bitcoins to pay off the national debt,” Schiff said in a post.
He explained that one million coins of the first cryptocurrency would not be enough to settle the country’s huge debt, which amounts to about $36 trillion.
#Bitcoin Pumpers claim that if the United States bought 1 million bitcoins, we would one day be able to use those bitcoins to pay off the national debt. For 1 million Bitcoins to be equivalent to today’s national debt of $36.25 trillion, the market capitalization of Bitcoin would be $761 trillion, 6 times larger than the global GDP!
– Peter Schiff (@PeterSchiff) December 13, 2024
As of press time, Bitcoin is trading at $102,286 per coin. At the current price, one million bitcoins would amount to more than $102 billion, a huge sum but still small compared to the massive national debt of $36.25 trillion.
Bitcoin can only achieve this if its market value rises by more than 20,000%, the economist said, doubting whether Bitcoin could reach such massive growth.
“For one million Bitcoins to be equivalent to today’s national debt of $36.25 trillion, the market capitalization of Bitcoin would be $761 trillion, 6 times greater than global GDP,” he said.
Government debt continues to grow
Schiff believes that increasing the total value of Bitcoin by more than 200,000% is unlikely, so Bitcoin paying off US debt is not possible.
The economist explained that by then, if Bitcoin reaches $761 trillion in market capitalization, the country’s debt will also grow at that time, adding: “By then, the national debt will be much more than $36.25 trillion, which will require the price of Bitcoin.” Much higher.” To pay it off.”
He added that if the market capitalization of cryptocurrencies becomes too high, it is very likely that their price will fall, which will not be a good signal for traders.
He said that US debt It is not constant but increases over time, saying that the US government borrows money annually, and therefore, the country’s debt will continue to grow every year, making it difficult for Bitcoin to pay off the national debt.
It has not yet become a global currency
Schiff wondered whether Bitcoin would be adopted on a global scale like fiat currencies, noting that although Bitcoin prices are rising, cryptocurrencies have not yet been used as a global currency.
“There will be no universal adoption. So far very few people have ever adopted it,” Schiff noted.
He said that a few countries have accepted Bitcoin as their official currency, while many governments are still opposed to the idea of cryptocurrencies replacing their currencies.
“Bitcoin is a speculative asset, and its value is driven by hope, not real demand,” he said.
Featured image from Pexels, chart from TradingView
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