Today, the Chairman of the Federal Reserve, Jerome Powell, said in an exclusive interview with CNBC that Bitcoin is in competition with gold, not the US dollar.
BREAKING: 🇺🇸 Fed Chairman Jerome Powell says #Bitcoin is a competitor for gold, not the US dollar. pic.twitter.com/YQHFiThTBo
– Bitcoin Magazine (@BitcoinMagazine) December 4, 2024
“People use bitcoin as a speculative asset – it's like gold,” Powell said.
“It's just like gold, only it's virtual, it's digital. People don't use it as a form of payment or a store of value. It is very variable. It's not a competitor for the dollar, it's really a competitor for gold,” he said.
Although it seems he may have tripped over his own words, saying that no one is using bitcoin as a store of value when that is literally one of the most prominent use cases for it today , I agree with his overall position.
As an American living in America, I do not feel that BTC is in competition with the US dollar today. I, along with many other Bitcoiners I know, are trying to collect as much bitcoin as we can, using it as a store of value. When I spend bitcoin, which I do every weekend when I buy beef at the farmer's market) it's not the bitcoin from my long-term savings that I'm spending. I take dollars from my bank account, buy bitcoin on Cash App, and send that bitcoin directly to the farmer using the Lightning Network. I feel like I'm basically spending the dollars in my bank rather than the bitcoin I'm collecting.
I prefer to spend my dollars, a depreciating asset, and save in bitcoin, an appreciating asset. Since BTC is not widely accepted where I live, I need dollars in my daily life. I am also motivated to spend my dollars instead because I can earn more bitcoin by using bitcoin-back rewards apps like Fold and Lolli.
I also prefer to store my wealth in bitcoin compared to gold. I don't need gold, because I can't spend it anywhere, and while it keeps its value vs the dollar, it still loses value against bitcoin year after year. It doesn't make sense for me to keep gold. When it comes to price valuation, why would I choose to hold a loser when I know the winner is going to outperform it?
I would predict that most Americans would choose the dollar over bitcoin today when it comes to a medium of exchange. Bitcoin is not in competition with the dollar today. But when it comes to choosing a store of value, gold or bitcoin, I think bitcoin is the clear winner. Although the market cap of bitcoin is still only a fraction of gold, I believe that bitcoin will still be seen as better than gold. Whether Powell is aware of all the properties of Bitcoin, he is right that bitcoin is much more like a digital form of gold than a new currency for payments in the United States.
This article is a Take. The views expressed are entirely those of the author and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.
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