American publisher Steve Forbes attacked the fixed supply of Bitcoin, saying that this feature actually inhibits the ability of cryptocurrencies to “meet the needs of economic growth.” He also argued that Bitcoin cannot replace the U.S. dollar because it is currently too volatile to act as a currency. Forbes insists that money is most effective only if it has stable value.
New respectable investment category
According to Forbes, cryptocurrencies can only challenge existing currencies if their value is linked to gold or Swiss franc currency. However, when Forbes admitted his views were against the idea that Bitcoin will eventually replace the U.S. dollar, he admitted that cryptocurrency “is now regarded as a respected investment category.” He added: “Financial institutions are adding it to their portfolio.”
Forbes explained this shift to Bitcoin, saying:
People are flooding in due to lack of trust in government legal tender. The Federal Reserve and other central banks lowered interest rates and printed unimaginable amounts to pay for Covid’s rescue measures and stimulate the damaged economy.
According to the publisher, some of these steps are inflationary and may be the possible reason why Bitcoin is now “the darling of investors”. In addition, “Forbes” also admitted that some enthusiasts do see Bitcoin as the “new gold”, while others believe that it will “eventually replace the US dollar.”
The impact of Bitcoin fluctuations on contracts
Nevertheless, due to how Bitcoin’s volatility may affect the contract system, this idea will not happen. The publisher used home mortgage loans as an example to explain why cryptocurrencies cannot be used in contracts. He said it was “critical to the economy”. Forbes explained:
Suppose you pledged a $250,000 mortgage in March, and today you owe the bank nearly $2 million.
Forbes speculated that “people with the right minds will not sign long-term contracts based on Bitcoin.”
Do you agree with Steve Forbes that Bitcoin will not replace the U.S. dollar? You can tell us your thoughts in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons