The mass Bitcoin adoption will only harm the current economy as central banks pump billions of dollars out and the rising inflation is becoming stronger. This is a view shared by the number of economists that raise the possibility that Bitcoin could become more attractive as a store of value as we are reading further in the Bitcoin news today.
The possibility of mass bitcoin adoption raises a serious question: what will happen to the entire economy in macroeconomic terms if Bitcoin gets used every day? For some economists, saving assets in Bitcoin will only hurt consumer spending while it could also increase the investment. Wider Bitcoin use will raise living standards in the poorer countries and will limit private credit creation. For some other economist, saving money with Bitcoin will lower spending, as Dr. John Vaz commented:
“I don’t see increased saving through bitcoin as consistent with economic and consumer spending growth. Bitcoin removes money available to the fiat monetary systems for lending and so on where there is a multiplier effect in terms of money available in the economy. Increased savings generally, in the short run, reduce consumer spending to the extent the rate of saving increases.”
The mass bitcoin adoption doesn’t mean that every BTC holder will save their bitcoin with the rising inflation. As Pete Earle from the American Institute for economic research explained, the economic necessity will only ensure most of the people will still have to spend some of their holdings:
“Ceteris paribus [other things equal]: if more people began saving in bitcoin vs. in, say, dollars, I don’t think it would hurt the US economy much. They would still have to pay their mortgages or rent, car payment, and bills; and I don’t see any reason why they’d radically change their discretionary income choices.”
Another crypto-economist Anya Nova agrees. She believes that the Adoption of bitcoin will not lessen consumer spending and people that lose money will. According to Nova, the increased bitcoin adoption will have positive macroeconomic effects because Bitcoin’s transparency will encourage more prudent fiscal practices:
“There are no guarantees about the future price of bitcoin, but there are certain features of BTC that can fuel increased economic growth. Bitcoin is transparent, meaning that anyone can freely check online how much BTC there is and which BTC accounts own the most. Such a high level of transparency puts pressure on traditional financial institutions to open up and match that openness, which can only be good for consumers and investors.”
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