Bitcoin won’t work as a currency unless it’s tied to Gold: Economist Steve Hanke

Bitcoin won’t work as a currency unless it’s tied to Gold: Economist Steve Hanke

According to Johns Hopkins economist Steve Hanke, Bitcoin cannot truly function as a real currency unless it’s backed by something with stable value. Hanke is known to be harsh towards Bitcoin but he does not discount the cryptocurrency sector as a whole. He believes blockchain can be useful in creating digital assets but remains adamant that these assets need to be backed by real-world value.

“#Bitcoin is not a currency, it is a speculative asset. In order for a #crypto-“currency” to be an actual currency, it must be tied to gold.”

Beneath his statement, he placed a cartoon of a man giving an empty box to a woman as a gift. After she opens the empty box the man tells her it’s a “Bitcoin necklace” and the woman is clearly unsatisfied. 

While obviously deriding the most valuable cryptocurrency, Hanke always seems to leave these conditions in his comments about Bitcoin. In the past, he has argued that any digital asset needs to be backed by a “basket of commodities” in order to be truly valued. 

Just recently, he spoke negatively about Bitcoin and the state of the markets.

“#Bitcoin is a highly speculative asset, not a currency. Unreliability, lack of stability, and susceptibility to fraud will continue to plague #crypto ‘currencies’. Don’t be tricked, buying bitcoin is a fool’s game.”

But Hanke continues to give mixed signals on the cryptocurrency world. Although he constantly warns of the volatile crypto market and the presence of fraudulent activities, he’s also argued that Venezuela can adopt the use of blockchain to help solve their financial crises. Hanke has also reiterated several times that a blockchain-based digital asset can be useful in the world of finance if set up correctly.


And Hanke is not alone in his belief that gold and cryptocurrency could work well together. Nearly a hundred crypto startup projects are currently claiming to have an asset backed by gold. And gold ownership can be made much easier with the use of blockchain. While the physical metals can be stored away safely, users can move their value with ease and without permission. 

While many old school investors see no better store of value than gold and are wary of cryptocurrencies, it is a promising sign that many still see a use for blockchain in the world of precious metals.