A renowned economist disagrees with bitcoin supporters who claim that the cryptocurrency could one day solve the United States' national debt.
Economist Peter Schiff expressed his skepticism on the bold claim by what he called “bitcoin firefighters” that 1 million btc can pay off the country's national debt, saying that even with that amount of cryptocurrency, it will still be insufficient to address the country's massive government debt.
Not enough to pay off the 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, the cryptocurrency needs to achieve an unrealistic increase of more than 20,000% in its market capitalization.
“#bitcoin promoters claim that if the United States buys 1 million bitcoin, we will one day be able to use that bitcoin to pay off the national debt,” Schiff said in a post.
He explained that 1 million coins of the first-born cryptocurrency would not be enough to pay off the country's enormous debt of around $36 trillion.
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<a target="_blank" href="https://twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>#bitcoin Pumpers claim that if the United States buys 1 million bitcoin, we will one day be able to use that bitcoin to pay off the National Debt. For 1 million bitcoin to be equivalent to the current national debt of $36.25 trillion, bitcoin's market capitalization would be $761 trillion, 6 times larger than global GDP!
—Peter Schiff (@PeterSchiff) <a target="_blank" href="https://twitter.com/PeterSchiff/status/1867637647709286609?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>December 13, 2024
At press time, bitcoin is trading at<a target="_blank" href="https://www.coingecko.com/en/coins/bitcoin” target=”_blank” rel=”noopener nofollow”> $102,286 per coin. At current prices, one million Bitcoins would be equivalent to more than $102 billion, a huge amount but still meager compared to the massive national debt of $36.25 trillion.
The economist said that bitcoin could only make this happen if its market capitalization increased by more than 20,000%, doubting that btc could ever achieve that exponential growth.
“For 1 million bitcoin to be equivalent to today's $36.25 trillion national debt, bitcoin's market capitalization would be $761 trillion, 6 times larger than global GDP,” he said.
Public debt continues to grow
Schiff considers it unlikely that the total value of bitcoin will increase by more than 200,000%, so it is not possible for btc to pay off the US debt.
The economist explained that by the time, if bitcoin ever reached $761 trillion in market capitalization, state debt would also grow at that time, adding: “By then, the national debt will be well over $36.25 trillion.” dollars, which will require a much higher bitcoin price.” to pay for it.”
He added that if the market capitalization of the cryptocurrency increases too much, it is very likely that its price will fall, which would not be a good sign for traders.
He maintained that the US debt is not fixed, but increases over time, saying that the US government borrows money annually, so consequently the state debt will continue to grow every year, making it even more difficult for bitcoin to pay off the national debt .
It is not yet a global currency
Schiff questioned whether bitcoin would be adopted on a global scale like fiat currencies, noting that although btc prices have skyrocketed, the cryptocurrency has not yet been used as a global currency.
“There will be no global adoption. So far very few people have adopted it,” Schiff said.
He said 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 actual demand,” he said.
Featured image from Pexels, chart from TradingView
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