An influential economist has cast doubt on the idea touted by some Bitcoin enthusiasts that cryptocurrency might one day resolve the United States’ national debt crisis.
Peter Schiff, known for his critical stance on Bitcoin, challenged the optimistic assertions from what he refers to as “Bitcoin pumpers.” These proponents claim that acquiring 1 million BTC could help settle the hefty national debt. However, Schiff pointed out that even this substantial holding wouldn’t make a dent in the $36 trillion of government debt.
Insufficient For Settling US Debt
Schiff argues that the prospect of using million Bitcoin to clear the US national debt requires an improbable leap in Bitcoin’s market capitalization, specifically a skyrocketing increase of more than 20,000%.
“Bitcoin enthusiasts suggest that if the U.S. were to purchase 1 million Bitcoins, it might eventually cover the national debt,” Schiff stated online.
He further elaborated that the quantity of Bitcoins proposed is nowhere near adequate for tackling the enormous $36 trillion national debt.
In a tweet, Schiff explained: “For a million Bitcoins to cover today’s $36.25 trillion national debt, Bitcoin’s market cap would have to soar to $761 trillion, which is six times larger than the current global GDP!”
Presently, Bitcoin is trading around $102,286 per coin. This places the total value of one million Bitcoins at a little over $102 billion, a substantial sum but still a drop in the ocean compared to the national debt figure of $36.25 trillion.
Schiff remains skeptical, highlighting that a market cap increase by over 20,000% is necessary, questioning the feasibility of Bitcoin ever experiencing such exponential growth.
He restated: “Achieving a market cap of $761 trillion for Bitcoin, which would be necessary to offset the national debt, is just beyond the realm of possibility.”
Ever-Increasing Government Debt
Schiff considers the scenario where Bitcoin’s value magnifies by over 200,000% as far-fetched, hence dismissing the notion it could eliminate US debt.
He further explained that even if Bitcoin’s market cap dramatically increased to $761 trillion, the national debt would have likely grown by then as well. “By that time, the debt could far exceed $36.25 trillion, necessitating an even higher Bitcoin value for resolution.”
Moreover, if Bitcoin reached such a heightened market cap, its subsequent decline could spell trouble for investors.
The economist reminded that US debt is not static but consistently inflates because the government continues to borrow each year, enhancing the challenge Bitcoin would face in addressing it.
Bitcoin: Not Yet Global Currency
Schiff also raised questions about Bitcoin’s potential for adoption on a global scale, akin to fiat currencies. Despite the soaring prices, Bitcoin isn’t widely used as a global currency.
“There isn’t going to be global adoption. Up to now, only a small number of people have embraced it,” Schiff remarked.
He noted that while some nations have incorporated Bitcoin as an official currency, many governments resist cryptocurrency replacing their traditional money systems.
“Bitcoin is speculative and its valuation is largely based on hope rather than genuine demand,” he concluded.
Featured image from Pexels; chart from TradingView.
