London School of Economics teacher Jon Danielsson argues that Bitcoin and fiat cannot co-exist. Danielsson claims the concept of Bitcoin as money makes no sense. Furthermore, if it succeeds, he envisions a world with great inequality, contrary to its principle of equality.
“Fortunately, the more successful Bitcoin becomes, the more negative consequences and internal contradictions become, so Bitcoin and other cryptocurrencies will be eliminated long before we get to. at that moment. At that time, Bitcoin price will return to 0 ”.
Bitcoin continues to be controversial
A record-breaking month saw Bitcoin hit $ 58k for the first time in history. Although the price drops this week have worried the market, it is important to note that the fundamentals remain stable.
If anything, it thrives, as evidenced by the interest of organizations over the past few weeks. And more recently, Coinbase’s S-1 profile led many to predict that would bring an element of crypto legitimacy.
However, despite these achievements, to be fair, Bitcoin is still torn between hate and skepticism even though perhaps now to a lesser extent, after its value has nearly tripled. times since December.
Many are reassessing and receptive to learn more while there are those who cling to outdated ideas and principles by doubling their skepticism.
Danielsson falls into the second group. Like many economists examining Bitcoin, Danielsson views the leading cryptocurrency through the “old world” lens. In doing so, some basic metrics are ignored.
Comparing the demand for money (M1) with Bitcoin, for example, is unfounded. Very few retailers accept Bitcoin directly because it’s too slow and expensive to transact. However, service providers like BitPay provide intermediary services for converting cryptocurrencies to fiat money at the point of sale.
The role of an ineffective medium of exchange has not diminished the overall value of the king of cryptocurrencies. Just as retailers do not accept gold, it makes no sense to say that gold will go to zero on that basis.
Danielsson paints a hypothetical situation in which Bitcoin successfully erodes the market capitalization of all world assets, fueling an even greater split between those with and without.
There is no answer that can adequately satisfy that scenario. However, in such a situation, the world would be a very different place and Bitcoin should not be held responsible for those who refuse to adapt to change.
Bitcoin is a nascent technology that doesn’t conform to the classical definitions of money according to economic theory. As a decentralized and permissionless network, its commitment makes more sense than a mere exchange of value, as is the case with currency.
Perhaps the bigger question here is, why is demand for Bitcoin skyrocketing? Answering that question will provide insight into how people feel about the status quo.