A renowned economist disagrees with Bitcoin supporters who claim that cryptocurrency could someday solve the national debt of the United States.
Economist Peter Schiff expressed his skepticism on the bold declaration of what he called “Bitcoin pumpers” that 1 million BTC can settle the country’s national debt, saying that even with that number of cryptos, it will still be insufficient to address the country’s enormous government debt.
Not Enough To Pay US Debt
Schiff does not believe that 1 million Bitcoin is the answer to paying off the US national debt, arguing that to do that, the crypto needs to attain an unrealistic increase of over 20,000% in its market capitalization.
“#Bitcoin pumpers claim that if the U.S. buys 1 million Bitcoin, someday we will be able to use that Bitcoin to pay off the National Debt,” Schiff said in a post.
He explained that 1 million coins of the firstborn cryptocurrency would not be adequate to settle the country’s massive debt of around $36 trillion.
#Bitcoin pumpers claim that if the U.S. buys 1 million Bitcoin, someday we will be able to use that Bitcoin to pay off the National Debt. For 1 million Bitcoin to equal today’s $36.25 trillion National Debt, Bitcoin’s market cap would be $761 trillion, 6x larger than world GDP!
— Peter Schiff (@PeterSchiff) December 13, 2024
As of press time, Bitcoin is traded at $102,286 per coin. At the current price, one million Bitcoins would amount to over $102 billion, a huge amount but still meager compared to the enormous national debt of $36.25 trillion.
The economist said that Bitcoin could only make this happen if its market capitalization surged by over 20,000%, doubting if BTC could ever reach that exponential growth.
“For 1 million Bitcoin to equal today’s $36.25 trillion National Debt, Bitcoin’s market cap would be $761 trillion, 6x larger than world GDP,” he said.
Government Debt Keeps On Growing
Schiff sees Bitcoin’s total value increasing by more than 200,000% as improbable, so BTC paying the US debt is not possible.
The economist explained that by the time, if ever, Bitcoin reached $761 trillion in market capitalization the state debt would also grow at that time, adding, “By then the national debt will be much more than $36.25 trillion, requiring a much higher Bitcoin price to pay it off.”
He added that if the crypto’s market capitalization becomes too high, it is highly likely that its price will fall, which would not be a good cue for traders.
He argued that the US debt is not fixed but rather increases over time, saying that the American government borrows money annually, so consequently, state debt will continue to grow every year, which makes it even harder for Bitcoin to pay off the national debt.
Not Yet A Global Currency
Schiff questioned if Bitcoin would be adopted at a global scale like fiat currencies, noting that even though BTC’s prices have soared, the crypto has not yet been used as a global currency.
“There will not be global adoption. So far very few people have adopted it at all,” Schiff remarked.
He said that few countries have accepted Bitcoin as their official currency while many governments still oppose the idea of crypto replacing their currencies.
“Bitcoin is a speculative asset, and its value is driven by hope, not real demand,” he said.
Featured image from Pexels, chart from TradingView
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