A renowned economist disagrees with Bitcoin supporters who say the cryptocurrency could one day solve the US national debt.
Economist Peter Schiff expressed his opinion skepticism on the bold declaration of so-called “Bitcoin pumpers” that 1 million BTC can settle the country’s public debt, saying that even with this number of cryptocurrencies it will still be insufficient to deal with the country’s huge government debt.
This is not enough to pay off the American debt
Schiff does not believe that 1 million Bitcoins is the answer to paying off the U.S. national debt, arguing that to do so the cryptocurrency must achieve an unrealistic enhance in its market capitalization of over 20,000%.
“#Bitcoin supporters claim that if the United States buys 1 million Bitcoins, we will one day be able to use that Bitcoin to pay off the national debt,” Schiff wrote in the post.
He explained that 1 million coins of the original cryptocurrency would not be enough to settle the country’s massive debt of approximately $36 trillion.
#Bitcoin Pumpers claim that if the United States buys 1 million Bitcoins, we will one day be able to employ that Bitcoin to pay off the national debt. If 1 million Bitcoins equaled today’s National Debt of $36.25 trillion, Bitcoin’s market capitalization would be $761 trillion, or 6 times the world’s GDP!
— Peter Schiff (@PeterSchiff) December 13, 2024
At the time of publication, Bitcoin is traded $102,286 per coin. At the current price, one million Bitcoins would equate to over $102 billion, which is a huge amount but still modest compared to the massive national debt of $36.25 trillion.
The economist said Bitcoin could only do this if its market capitalization increased by more than 20,000%, doubting whether BTC would ever achieve such exponential growth.
“If 1 million Bitcoins equaled today’s National Debt of $36.25 trillion, Bitcoin’s market capitalization would be $761 trillion, or 6 times the world’s GDP,” he said.
Public debt is constantly growing
Schiff considers Bitcoin’s total value to enhance by more than 200,000% as unlikely, so BTC’s repayment of US debt is not possible.
The economist explained that by the time, if ever, Bitcoin reaches a market capitalization of $761 trillion, the national debt will also have increased, adding: “By then, the national debt will be well over $36.25 trillion, which will require a much higher Bitcoin prices. to pay it off.”
He added that if a cryptocurrency’s market capitalization becomes too high, it is highly likely that its price will drop, which would not be a good sign for traders.
He argued that US debt is not constant, but rather increases over time, saying that the US government borrows money every year and therefore the national debt will continue to grow year after year, making it even more challenging for Bitcoin to pay off the national debt.
It is not yet a global currency
Schiff questioned whether Bitcoin would be adopted on a global scale like fiat currencies, noting that while BTC prices have skyrocketed, the cryptocurrency has not yet been used as a global currency.
“There will be no global adoption. So far, very few people have even embraced it,” Schiff noted.
He said that few countries have accepted Bitcoin as their official currency, while many governments are still opposed to the idea of replacing their currencies with cryptocurrencies.
“Bitcoin is a speculative asset and its value comes from hope, not real demand,” he said.
Featured image from Pexels, chart from TradingView
