American publisher Steve Forbes has attacked bitcoin’s fixed supply saying this feature actually curbs the ability of the crypto to “meet the needs of a growing economy.” He also argues that bitcoin cannot replace the dollar because it is presently too volatile to function as money. Forbes insists that money only works best if it has a stable value.
New Respectable Investment Class
According to Forbes, cryptocurrencies can only challenge existing money if their value is tied to that of gold or the Swiss franc currency. In arguing his case against the idea that bitcoin will eventually replace the dollar, Forbes concedes, however, that the crypto is “now seen as a respectable investment class.” He adds that “financial institutions are adding it to their portfolios.”
Explaining this shift towards bitcoin, Forbes says:
People are piling in because of a lack of faith in government fiat currencies. The Federal Reserve and other central banks have crushed interest rates and are printing unimaginable amounts of money to pay for Covid relief measures and to stimulate damaged economies.
According to the publisher, some of these steps, which are inflationary, could be the possible reasons why bitcoin has now “become the darling of investors.” Furthermore, Forbes also acknowledges that some enthusiasts do see bitcoin as “the new gold” while others believe it will “eventually replace the dollar.”
Impact of Bitcoin Volatility on Contracts
Nevertheless, the thinks this is not about to happen because of how bitcoin’s volatility can potentially affect the contract system. The publisher uses the example of a housing mortgage loan to illustrate why cryptocurrencies cannot be used in contracts which he says “are essential for an economy.” Forbes explains:
Say you took a mortgage in March for $250,000, today to you owe the bank almost $2 million.
Forbes surmises that no one in “their right mind would sign a long term contract based on bitcoin.”
Do you agree with Steve Forbes’ sentiments that bitcoin will not replace the dollar? You can tell us what you think in the comments section below.
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