The fact that Bitcoin is now a significant innovation rather than a fad that could soon render the dollar and most fiat currencies ineffective cannot be further from the truth.
In the recent past, the crypto asset has steadily proven its value, emerging strongly from traditional iniquities that have always plagued fiat currencies due to their inflationary nature.
With El Salvador having already taken the first leap in making Bitcoin a legal tender due to the inflationary nature of the dollar, Americans and by large; citizens in other parts of the globe are fast adopting this new form of ultrasound money.
A recent publication by Avik Roy, a policy editor at Forbes shines the light on the reasons why America should respond to the U.S. fiscal reckoning by adopting Bitcoin.
He argues that it is time the U.S. responded to the ever-changing monetary environment prompted by factors such as the devaluation of fiat currency through reckless spending and borrowing.
“In time, policymakers will face a Solomonic choice: either protect Americans from inflation or protect the government’s ability to engage in deficit spending. It will become impossible to do both. Over time, this compounding problem will escalate the importance of Bitcoin,” he says.
Avik estimates that the Dollar could lose its validity to Bitcoin in the next 10 to 20 years as the crypto asset’s liquidity plummets due to massive individual and institutional adoption. According to him, “with asset values reaching bubble proportions and no end to federal spending in sight, the United States must begin planning for this possibility now.”
Bitcoin’s Wind Of Change Is Inevitable
Policymakers and regulators should work towards embracing Bitcoin for the role it could play in warding off inflation. They should make it easier for crypto entities to operate in the U.S. by first providing legal clarity on cryptocurrencies and avoid preying on startups. The SEC had recently been put in the spotlight for flagging Coinbase’s Lend product without offering clarity as to which law was violated. The prolonged approval of an ETF fund also revolves around the lack of legal clarity.
Avik supports SEC’s Hester Peirce’s call for a three-year grace period for cryptocurrencies before a new agency can be assigned the role of providing oversight on digital assets.
He also calls for Congress to provide clear legislation on digital assets and shun adopting poorly drafted laws such as the contested bipartisan Infrastructure Bill. Treasury should also replace a portion of its gold holdings with Bitcoin in cushioning the U.S. from the effects of inflation when the dollar deflates and Bitcoin surges.
Accordingly, he calls on Americans to strongly oppose and warn policymakers from adopting a Central Bank Digital Currency (CBDC) like China. He argues that a CBDC could completely kill local banks by making traditional accounts obsolete. The FED is also likely to abuse people’s privacy rights by accumulating a lot of information about them as well as provide various security threats.
With Bitcoin enabling Americans to protect their wealth from mismanagement by the government and improving financial security for them, the U.S. government should seize this opportunity and build the right infrastructure for the survival of its economic strength.