2021-1-21 13:24 |
It is a popular opinion that bitcoin’s limited supply makes it more valuable and superior to other asset classes and fiat money. There are only about 18.58 million bitcoins currently in existence. Out of this, 14.5 million is illiquid and inaccessible, while only 4.2 million is in circulation and available for trading.
The constantly diminishing number of circulating bitcoins appears to many investors as a sign to increase their holdings, especially as fiat money’s supply is unlimited and hugely suffers from inflation. To many, bitcoin is the future of money.
Steve Forbes however holds a different opinion.
“People are piling in because of a lack of faith in government fiat currencies. The Federal Reserve and other central banks have crushed interest rates and are printing unimaginable amounts of money to pay for Covid relief measures and to stimulate damaged economies.”
To him, the rush to hop on the crypto train is not enough reason to fend off fiat. The publisher of Forbes Magazine asserts that cryptocurrencies are too volatile to replace fiat money.
For a glimmer of hope to exist, these cryptocurrencies must have a fixed value tied to a stable asset like gold.
He also believes that bitcoin’s limited supply is a barrier and not a catalyst to mainstream adoption. Forbes argues that the limited supply of bitcoin will make it impossible to meet the growing needs of a growing economy.
“Another problem with bitcoin is that its supply is fixed. Its amount cannot be increased. By contrast, the supply of money must be able to expand to meet the growing needs of a growing economy.”
Forbes further elaborated by citing an example of the United States’ rise to becoming the world’s biggest industrial nation between 1775 and 1900. During this period, the dollar supply reportedly increased by 160-fold. By highlighting this, Forbes hints that bitcoin’s limited supply may stall such economic growth.
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