Bank

United

Jerome Powell

Bitcoin

Reserve

<p><strong>After the Governor of the Bank of France, it is now Jérôme Powell’s turn to water down his wine regarding Bitcoin.</strong></p>
<h2 id="bitcoin-the-digital-gold">“Bitcoin, the digital gold”</h2>
<p>Jérôme Powell answered questions from journalist Andrew Ross Sorkin this Wednesday, the very same journalist who attracted ridicule for refusing to grant Bitcoin the <a href="https://www.cointribune.com/en/bitcoin-will-never-stop-laura/" target="_blank" rel="noopener noreferrer nofollow">status of a store of value</a>.</p>
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<p>The President of the Fed agreed with him during a conference organized by the NY Times:</p>
<p><em>“People use Bitcoin as a speculative asset. It’s like gold, but virtual, it’s digital. People do not use it as a means of payment or as a store of value. It is very volatile. It is not in competition with the dollar, but with gold. This is how I see things.”</em></p>
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     <p lang="en" dir="ltr">NEW: Jerome Powell calls Bitcoin a competitor of gold, not the dollar <img src="https://s.w.org/images/core/emoji/14.0.0/72x72/1f440.png" alt="👀" class="wp-smiley" style="height: 1em; max-height: 1em;"> <a href="https://t.co/b2YGG0ojYF" rel="noopener noreferrer nofollow">pic.twitter.com/b2YGG0ojYF</a></p>— Bitcoin News (@BitcoinNewsCom) <a href="https://twitter.com/BitcoinNewsCom/status/1864391686429757481?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">December 4, 2024</a>
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<p>These statements are in line with those of Governor James Bullard who made the same analysis in 2021. The President of the Federal Reserve Bank of St. Louis had <a href="https://www.cnbc.com/2021/02/16/bitcoin-no-threat-to-dollar-as-worlds-reserve-currency-feds-james-bullard.html" target="_blank" rel="noopener noreferrer nofollow">stated</a> that Bitcoin <em>“is a rival to gold”.</em></p>
<p>Rational analysis or denial of reality? A bit of both. The first point of contention concerns the definition of what a store of value is.</p>
<p>One thing is certain, the dollar is not a store of value. Inflation was 25% over the past four years alone. In other words, the greenback buys 20% less than it did in 2020. At the same time, Bitcoin has appreciated over 400%, increasing its purchasing power fivefold.</p>
<p>Bitcoin is a technological breakthrough. For the first time in history, humanity has a liquid asset that exists in absolutely finite quantity. It is hard to imagine that such a currency cannot be classified as a store of value stricto sensu.</p>
<h2 id="h-bitcoin-vs-dollar">Bitcoin vs Dollar</h2>
<p>Where Jérôme Powell is not wrong is that Bitcoin is not designed to facilitate 100% of transactions. It can only handle a handful of thousands of transactions every 10 minutes, compared to the 13 million transactions of the traditional monetary system.</p>
<p>Admittedly, the Lightning Network (LN) allows for scaling, but slowly. With <a href="https://ycharts.com/indicators/bitcoin_average_transactions_per_block" target="_blank" rel="noopener noreferrer nofollow">4,000</a> transactions per block, it would take 40 years for every human to connect to the LN. This bottleneck prevents the sudden emergence of Bitcoin as a universal means of payment.</p>
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<p>Moreover, exchange platforms take their cut with each Bitcoin purchase. These fees make BTC transactions non-competitive compared to Mastercard or Visa. In Europe and the United States, these fees amount to 0.3% and are moreover paid by the seller.</p>
<p>Furthermore, Bitcoin exists in a fixed quantity, which means that a bank could not create loans ex nihilo. Loans would be much rarer and more expensive. In short, the fractional reserve system is a Ponzi scheme that has its advantages. It is even essential to a complex (capital-intensive) society.</p>
<p>If Bitcoin cannot replace the fiat system, it could however replace it in global currency reserves. The latter amount to 12,500 billion dollars, not accounting for gold. Bitcoin is undeniably a robust payment system and sufficiently capable of handling daily reconciliations between countries.</p>
<p>It is a store of value while also being an uncensorable payment system, two-in-one. This aspect resonates with countries wishing to reduce their dollar reserves. Vladimir Putin even stated this week: <em><a href="https://www.cointribune.com/en/poutine-who-can-stop-bitcoin-no-one/" target="_blank" rel="noopener noreferrer nofollow">“Who can ban Bitcoin? No one”</a></em>.</p>
<p>The creation of a strategic reserve of Bitcoins by the United States also goes in this direction, regardless of what central bankers think.</p>
<p>Don’t miss our article: <em><a href="https://www.cointribune.com/en/trump-between-the-dollar-and-bitcoin/" target="_blank" rel="noopener noreferrer nofollow">“Trump between the Dollar and Bitcoin”.</a></em></p>

Bitcoin – Jerome Powell Also Tempered His Views

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