4 months ago
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Bitcoin marxists strongly believe that if the US government begins to acquire Bitcoin now and holds it for the next 20 years, it can pay off its national debt.
History across the world has shown that increasing national debt is a precursor for inflation which ends up ripping confidence off traditional fiat currencies. Unfortunately for the United States, its outstanding borrowing has climbed to $35 trillion. However, co-founder of trading firm GSR Rich Rosenblum, pointed to a silver lining with Bitcoin (BTC) in the mix.
Bitcoin as Hedge to US Debt
In the past, sovereign nations and investors hardly got the opportunity to seek out and invest their funds in alternative assets as a hedge against imminent inflation. In the current day, this is not the case. These entities now have access to alternative assets including Gold and cryptocurrencies like Bitcoin that could help manage the inflationary pressure.
Much more, Rosenblum pointed to “the fact that much of the world has ballooning debt and is arguably in a ‘debt trap’ is the part that’s really good for Bitcoin”.
Meanwhile, as the US national debt follows an increasing trend, the purchasing power of the dollar goes in the opposite direction marked by a decline. There are several governments, businesses, and individuals who already view BTC as a hedge against inflation and currency devaluation. These entities are keen on the flagship cryptocurrency’s decentralized nature, its limited supply and its capacity to act as a store of value.
While rising national debt is eye-catching, Rosenblum noted that it doesn’t provide the full picture.
The high debt level is a threat to fiscal policy and economic stability. This is even more troubling as the US prepares for the upcoming presidential elections in November. For context, the government usually becomes handicapped by high levels of debt as it impairs the authority’s ability to swiftly respond to economic downturns or any other emergencies.
It also limits the government’s fiscal flexibility, thereby potentially increasing borrowing costs. Bitcoin proponents believe that all these challenges could be solved with a proper reserve strategy.
Peter Schiff Faults Proposal to Offset US National Debt With BTC
Bitcoin marxists strongly believe that if the US government begins to acquire Bitcoin now and holds it for the next 20 years, it can pay off its national debt. For the proponents of this model, the rationale is that Bitcoin price will hit millions of dollars per coin. At such a high value, it would conveniently cover the US national debt.
While these enthusiasts are optimistic, gold proponent Peter Schiff thinks their proposal is flawed and misguided. It is contradictory to believe that BTC price could reach such high levels as a result of inflation and that the US government could use the crypto asset to settle debt without inflating USD.
Schiff has always questioned Bitcoin’s capacity to ‘save the world’. When Bitcoin faced a price decline in April around the time when explosions happened in Central Iran and Israel, Schiff seized the opportunity to criticize the coin. He pointed out its vulnerability to geopolitical events and its status as a highly speculative asset rather than a haven.
