American publisher Steve Forbes has attacked bitcoinâ€™s fixed supply saying this feature actually curbs the ability of the crypto to â€œmeet the needs of a growing economy.â€� 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 â€œnow seen as a respectable investment class.â€� He adds that â€œfinancial institutions are adding it to their portfolios.â€�
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 â€œbecome the darling of investors.â€� Furthermore, Forbes also acknowledges that some enthusiasts do see bitcoin as â€œthe new goldâ€� while others believe it will â€œeventually replace the dollar.â€�
Impact of Bitcoin Volatility on Contracts
Nevertheless, the thinks this is not about to happen because of how bitcoinâ€™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 â€œare essential for an economy.â€� 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 â€œtheir right mind would sign a long term contract based on bitcoin.â€�
Do you agree with Steve Forbesâ€™ sentiments that bitcoin will not replace the dollar? You can tell us what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
The post Steve Forbes Says Bitcoin’s Fixed Supply Limits Its Ability to ‘Meet the Needs of a Growing Economy’ appeared first on TechFans.