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>
<div class="my-4">
 <div class="ads " data-page-type="" data-location="1">
 </div>
</div>
<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>
<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper">
  <div class="entry-content-asset">
   <div class="social-embed-container">
    <blockquote class="twitter-tweet" data-width="500" data-dnt="true">
     <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>
    </blockquote>
    <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
   </div>
  </div>
 </div>
</figure>
<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>
<div class="my-4">
 <div class="ads " data-page-type="" data-location="2">
 </div>
</div>
<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

Table of Contents

Cointribune EN

Other articles published on Dec 5, 2024

ETH Price Skyrocketing As Addresses Count Surge, $4,000 Incoming?

Turn $500 Into $50,000 With These 4 Crypto Picks Before Christmas

Trump’s Team Discusses Potential White House Crypto Role Amid Growing Industry Influence

Ripple’s RLUSD Stablecoin Prepares for Monumental Launch, XRP Price Expected to Skyrocket Followi...

Ripple Faces Regulatory Hurdle: Why the RLUSD Stablecoin Launch is Delayed

Bitcoin ATH Alert: Why BTC Is Skyrocketing to $104,000 Today

Join our free newsletter for daily crypto updates!