Yesterday, December 5, 2024, the Chairman of the Federal Reserve, Jerome Powell, said in an exclusive interview with CNBC that Bitcoin (BTC) is in competition with gold, not the US dollar.
“People use bitcoin as a speculative asset — it’s like gold,” Powell said.
“It’s just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold,” he added.
While it sounds like he may have stumbled on his own words, saying no one uses bitcoin as a store of value when that is literally one of its most prominent use cases for it today, I agree with his overall position.
As an American living in America, I do not feel that BTC is in competition with the U.S. dollar today. Myself, along with many other Bitcoiners I know, are trying to stockpile as much bitcoin as we can, using it as a store of value.
When I do spend bitcoin, which I do every weekend when I buy beef at the farmers market) it’s not the bitcoin from my long term savings that I’m spending.
People use bitcoin as a speculative asset — it’s like gold.
Jerome Powell
I’m taking dollars from my bank account, buying bitcoin on Cash App, and directly sending that bitcoin to the farmer using the Lightning Network. I feel like I’m basically spending the dollars in my bank rather than bitcoin that I hoard.
I prefer to spend my dollars, a depreciating asset, and save in bitcoin, an appreciating asset. Because BTC is not widely accepted where I live, I need dollars in my daily life.
I am also incentivized to spend my dollars instead because I can earn more bitcoin too by using bitcoin-back rewards apps like Fold and Lolli.
I also prefer to store my wealth in bitcoin as compared to gold. I don’t need gold, as I can’t spend it anywhere, and while it maintains value vs the dollar, it continues to lose value against bitcoin year after year.
It makes no sense for me to hold gold. When it comes to price appreciation, why would I choose to hold a loser when I know the winner is going to continue to outperform it?
I would predict that the overwhelming majority of Americans would choose the dollar over bitcoin today when it comes to a medium of exchange. Bitcoin is not in competition with the dollar today.
But when it comes to choosing a store of value, gold or bitcoin, I think bitcoin is the clear winner. Although bitcoin’s market cap is still only a fraction of gold’s, I believe bitcoin will continue to be seen as superior to gold.
Whether Powell is aware of all of Bitcoin’s properties, he’s right that bitcoin is strongly viewed much more like a digital form of gold than a new monetary mechanism for payments in the United States.
This is coming shortly after the Russian president Vladimir Putin said that “nobody can ban Bitcoin,” stressing that crypto will develop “one way or the other.”
