American economist Brian Wesbury has shared his thoughts on what would happen if the masses were to ditch fiat currencies and adopt bitcoin instead. He discussed whether the government would allow it to happen and how bitcoin can become a true currency.
Economist Brian Wesbury Answers Question About the Masses Ditching Fiat Currencies for Bitcoin
Brian Wesbury is an economist with a focus on macroeconomics and economic forecasting. He is currently the chief economist at First Trust Advisors, a financial services firm headquartered in Wheaton, Illinois.
He was asked on Fox Business News last week about what would happen “if the masses were to ditch fiat currency,” whether it will “trigger a financial collapse,” and “could bitcoin ever replace the dollar?” Wesbury began by acknowledging:
A lot of people who are buying bitcoin and other cryptocurrencies believe that they are going to replace the dollar.
He explained: “if they were to replace the dollar, if you take all the of the M1 — its all of the checking accounts and cash — in the system, you divide it by all the bitcoin that can exist — 21 million of them — you end up with over $300,000 worth of worth if it replaced the dollar.”
However, he raised a number of questions: “Will the government allow that to happen? Can you pay your taxes in bitcoin? Can you buy anything you want with bitcoin?” The economist opined:
That’s what has to happen for you to have a true currency … so it’s a long way away from that.
The chief economist did not mention that a growing number of jurisdictions are already embracing bitcoin for tax payments. For example, the canton of Zug in Switzerland announced that it will start accepting bitcoin for tax payments this year. Several other local governments in Switzerland have made a similar announcement, such as Zermatt.
Recently, the mayor of Miami said that he is working on allowing payments for city services in bitcoin. Furthermore, a growing number of stores are accepting bitcoin payments. Payments giant Paypal, for example, is planning to allow people to use cryptocurrency to pay for goods and services at 2.8 million merchants in its network this year.
Wesbury also claimed that the volatility of bitcoin is one of the problems. As an example, he said he hopped into his car with two bitcoins in his pocket. “When I got to the car dealer, I didn’t know if I could buy two cars or half a car and that’s one of the problems with bitcoin.” He concluded:
It’s so volatile that we don’t know really what it’s worth.
However, many experts have argued that the volatility of bitcoin decreases with rising adoption. Alliance Bernstein’s Inigo Fraser-Jenkins said in December that bitcoin’s volatility has significantly declined over the past three years, making it a more attractive store of value, and its relative volatility to both gold and stocks has fallen to historically low levels. In July, BTC’s volatility hit a three-year low. In addition, billionaire investor Bill Miller said Friday that bitcoin becomes less risky the higher the price goes.
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