Table of Contents Hide
Is Bitcoin a Threat to Traditional Currency? Is Bitcoin, and for that matter other digital currencies, a threat to the almighty dollar? Donald Trump believes so.
The Former President Speaks His Mind
Donald Trump said in an interview with Stuart Varney on the Fox Business Network, it “seems like a scam,” and, “I don’t like it because it’s another currency competing against the dollar.” He added that he would like the dollar to be “the currency of the world.”
Trump’s exchange followed a recent announcement from El Salvador that the country plans to accept cryptocurrency as legal tender. If it does, it will be the first country in history to do so.
Bitcoin’s Recent Struggles
For the popular digital currency, Donald Trump’s comments couldn’t have come at a worse time. Though its price briefly rallied after the Central American country’s news, it has been on a downhill trajectory since early May with no signs of recovery.
Bitcoin’s fall has been largely attributed to China’s financial industry regulators’ decision to ban payment companies and financial institutions from providing their clients with crypto services which resulted in a 30 percent drop in value. Additionally, only a week earlier, American electric vehicle manufacturer, Tesla, announced it would no longer accept the digital currency.
Is Donald Trump Right About Bitcoin’s Threat?
Since its inception in 2008, Bitcoin has been subject to wild price swings that have left a fair number of financial experts leery of digital currencies in general. Experts weighed in on its perceived threats.
Yes – It Lacks “Sound Financial Strength”
Co-founder of the investment management firm 7IM, Justin Urquhart-Stewart believes the digital currency could cause destabilization of currencies due to its lack of sound financial strength. He blames the likes of Tesla co-founder and CEO Elon Musk for generating its credible perception despite the digital currency’s “unreliable and wholly unfounded value.”
Urquart-Stewart expressed concern about Bitcoin’s rise as the result of what he referred to as a “young generation of punters who have no knowledge of financial planning and development.” He called for a national curriculum that would educate students about how to develop long-term wealth.
No – It’s Not Even a Currency
Chief market analyst for Markets.com Neil Wilson begs to differ.
Wilson said there are three requirements for something to qualify as a currency. It must be a unit of account, provide a good store of value, and be a means of payment.
“I call Bitcoin more of a security, like a stock or bond,” Wilson said, as he believes most buy it to hold onto and invest rather than to use it for spending. Wilson added that it is much too volatile to qualify as a currency.
Despite his disagreement with Donald Trump, Wilson does feel the cryptocurrency could be a small threat to gold. However, he also believes America is not going to allow cryptocurrencies of any kind to overtake the dollar.
While the government has been seemingly tolerating cryptocurrencies for some time now, when push comes to shove, Wilson believes governments will create their own cryptocurrencies and eliminate the competition.