A prominent economist disagrees with Bitcoin proponents who claim the cryptocurrency could someday solve the United States’ national debt.
Economist Peter Schiff expressed skepticism He called “bitcoin pumpers” the bold announcement that 1 million BTC could settle the country’s national debt, saying that with the number of cryptos, it would still be insufficient to solve the country’s massive government debt. .
Not enough to pay off the American debt
Schiff does not believe that 1 million bitcoins is the answer to paying off the US national debt, arguing that to do so, the crypto would need to achieve an unrealistic increase in its market capitalization of more than 20,000%.
“#Bitcoin pumpers claim that if the US buys 1 million bitcoins, someday we’ll 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 settle the country’s massive debt of about $36 trillion.
#Bitcoin Pumpers claim that if America buys 1 million bitcoins, someday we will be able to use that bitcoin to pay off the national debt. For 1 million bitcoins equal to today’s $36.25 trillion national debt, Bitcoin’s market cap would be $761 trillion, 6 times larger than the world’s GDP!
— Peter Schiff (@PeterSchiff) December 13, 2024
As of press time, Bitcoin is traded $102,286 per coin. At the current price, one million bitcoins would amount to more than $102 billion, which is a huge amount but still very small compared to the massive national debt of $36.25 trillion.
The economist said that Bitcoin can only do this if its market capitalization has increased by more than 20,000%, doubting whether BTC can ever reach that exponential growth.
“Equivalent to today’s $36.25 trillion national debt for 1 million bitcoins, bitcoin’s market cap would be $761 trillion, 6 times larger than world GDP,” he said.
Government debt is increasing continuously
Schiff considers it impossible for the total value of Bitcoin to increase by more than 200,000%, so BTC paying off the US debt is not possible.
The economist explained that by the time, if ever, bitcoin reaches $761 trillion in market capitalization, the national debt will also increase, “by which time the national debt will be much higher than the $36.25 trillion that bitcoin accounts for.” will cost too much to pay for it.”
He added that if the crypto’s market capitalization becomes too high, its price is very likely to fall, which would not be a good sign for traders.
He argued that the America’s Debt This is not fixed, but rather grows over time, saying that the US government borrows money every year, so the national debt will continue to grow every year, making it more difficult for Bitcoin to pay off the national debt. .
There is not yet a global currency
Schiff questioned whether bitcoin will be globally adopted like fiat currencies, noting that even though BTC prices have risen, the crypto has yet to be used as a global currency.
“There will be no global adoption. So far very few people have adopted it at all,” Schiff commented.
He said some countries have accepted Bitcoin as their official currency while many governments are still opposed to the idea of crypto replacing their currencies.
“Bitcoin is a speculative asset, and its value is driven by expectation, not actual demand,” he said.
Featured images from Pexels, charts from TradingView
