{"id":207531,"date":"2021-03-21T18:14:00","date_gmt":"2021-03-21T15:14:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\/"},"modified":"2021-03-21T18:14:00","modified_gmt":"2021-03-21T15:14:00","slug":"bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\/","title":{"rendered":"# Bitcoin\u2019s new use case? A report card for how the US handles the dollar"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3d3fe8a88c9\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3d3fe8a88c9\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\/#%E2%80%9CNo_evidence%E2%80%9D_that_Bitcoin_is_a_hedge\" >\u201cNo evidence\u201d that Bitcoin is a hedge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\/#A_store_of_value_and_investment_asset\" >A store of value and investment asset<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\/#Times_are_changing\" >Times are changing<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/bitcoins-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\/#Use_cases_cant_be_forced\" >Use cases can\u2019t be forced<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Bitcoin\u2019s new use case? A report card for how the US handles the dollar <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDMvZTkwZTViZjMtY2RjZC00MzdmLTgyZmUtZGM5ZjVlZDc4NWI4LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Throughout the middle of March, many Americans received stimulus checks from the government, and while the payments \u2014 $1,400 for every U.S. citizen earning less than $80,000 annually \u2014 will be a blessing for millions in desperate economic straits as a result of the COVID-19 crisis, it has raised again the specter of inflation. And as with many other things, this too has a Bitcoin (BTC) angle.<\/p>\n<p>On March 15, Galaxy Digital CEO Mike Novogratz proposed on NBC\u2019s <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/SquawkCNBC\/status\/1371434185827684355\"><em>Squawk Box<\/em><\/a> a new role for Bitcoin in light of recent stimulus measures \u2014 as \u201ca report card for how citizens think the government is doing managing their finances.\u201d If people believe that U.S. Treasury Secretary Janet Yellen et. al. can safely land this \u201cgiant supertanker\u201d that is fiscal and monetary stimulus, said Novogratz, then \u201cpeople will stop moving into Bitcoin.\u201d But for now, \u201cwe\u2019re in uncharted territories in how much money we\u2019re printing, and Bitcoin is a report card on that.\u201d<\/p>\n<p>Podcaster Preston Pysh <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/PrestonPysh\/status\/1369740844471877634\">urged<\/a> something similar a few days earlier in response to the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> that the U.S. House of Representatives had passed the $1.9-trillion COVID relief package: \u201cThink of #Bitcoin like a manipulation gauge.\u201d<\/p>\n<p>What is one to make of this? A new and exciting use case for the world\u2019s first cryptocurrency \u2014 i.e., as a sort of a feedback tool for monetary policymakers? Or just another fantasy of Bitcoin maximalists?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"%E2%80%9CNo_evidence%E2%80%9D_that_Bitcoin_is_a_hedge\"><\/span>\u201cNo evidence\u201d that Bitcoin is a hedge<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>David Yermack, a professor of finance at New York University\u2019s Leonard N. Stern School of Business, rejected the notion that BTC could serve as a \u201creport card\u201d for governments, telling Cointelegraph: \u201cThere\u2019s no evidence that Bitcoin provides a hedge against movements in sovereign currency.\u201d He added that \u201cwhen one looks at large samples for research purposes, evidence has been very hard to find in a statistically rigorous sense.\u201d<\/p>\n<p>Bitcoin is much too imprecise of a measure, others say. If inflation rises 2.4% over the course of the year, as the Federal Reserve recently <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2021\/03\/17\/heres-where-the-federal-reserve-sees-interest-rates-the-economy-and-inflation-going-in-the-future.html\">forecast<\/a>, will BTC\u2019s price also rise 2.4% \u2014 or some constant multiple thereof? Or conversely, if the Fed tightens up the money supply, tamping down inflation, will BTC\u2019s price also fall in step? BTC basically has to be highly correlated with the inflation rate to be useful as a feedback tool, and that seems unlikely.<\/p>\n<p>\u201cThe surge of liquidity from the Fed has fueled gains in virtually all major asset classes, with some pure speculative plays such as Bitcoin benefiting even more,\u201d Eswar Prasad, a professor of economics at Cornell University and senior fellow at the Brookings Institution, told Cointelegraph, adding:<\/p>\n<blockquote><p>\u201cIt is unlikely that Bitcoin prices will be seen as a reliable guide of any sort for monetary policy, particularly since it is traded in a relatively thin market that seems subject to manipulation and speculative waves.\u201d <\/p><\/blockquote>\n<p>Novogratz mustered some support for his hypothesis, however \u2014 on <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a> at any rate. On Feb. 28, he took an informal survey,\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/novogratz\/status\/1366176311732015109\">asking<\/a>:\u00a0\u201cIs $BTC a report card on monetary and fiscal policy?\u201d When the 3,000-plus votes were tallied, 70.8% answered \u201cyes,\u201d and 29.2% replied \u201cno.\u201d<\/p>\n<p>Nik Bhatia, author of the book <em>Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies<\/em> and adjunct professor of finance and business economics at the University of Southern California, told Cointelegraph that one has to separate fiscal stimulus from monetary stimulus. <\/p>\n<p>According to him, In the short term, there is clearly a positive relationship between fiscal<em> <\/em>stimulus and the price of Bitcoin. When people have new stimulus checks in their pockets, they are more likely to buy Bitcoin, which will increase the price of\u00a0BTC. Indeed, a recent Mizuho Securities survey\u00a0said U.S. stimulus checks could raise the market cap of Bitcoin by as much as 3% \u2014 though this survey had a small sample size.<\/p>\n<p>In any event, It\u2019s more difficult to show the connection between monetary<em> <\/em>stimulus and BTC, continued Bhatia. In the long term, most Bitcoinists probably believe that there is a positive correlation between monetary stimulus and BTC \u2014 that is, people alarmed by stimulus-created inflation will seek a haven in BTC, \u201cbut it is impossible to prove.\u201d In Bhatia\u2019s view, the reason that BTC\u2019s price is rising now \u2014 and will continue to do so \u2014 is the cryptocurrency\u2019s \u201cgrowing dominance in the international monetary system,\u201d he told Cointelegraph.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_store_of_value_and_investment_asset\"><\/span>A store of value and investment asset<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>While some say Bitcoin may not have any immediate future in this one specific use case<em> \u2014 <\/em>as a gauge for monetary policy \u2014 it still has other related use cases, including \u201cinsurance against unhinged monetary policy and outright wealth segregation in some countries,\u201d as Ark Investment Management\u2019s Cathie Wood <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/amp\/2021\/02\/23\/cathie-woods-funds-take-big-hits-as-tesla-and-the-tech-trade-show-signs-of-unwinding.html\">said<\/a> recently at a Bloomberg event. <\/p>\n<p>Wood added that BTC was gaining increasing recognition from institutions as an investment asset class, and it might even replace bonds in the traditional 60\/40 stocks\/bonds model portfolio, a view echoed by podcaster Graham Stephan, who <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=RPCxee8DETU\">anticipated<\/a> a new model portfolio along the lines of 70% invested in stocks, 15% in bonds and 15% in BTC someday. <\/p>\n<p>Scott Freeman, co-founder and partner of JST Capital, told Cointelegraph: \u201cWe do see that there are more traditional investors who view BTC as a hedge against undisciplined monetary policy. We\u2019ve seen that this has already driven demand in third-world countries, and we expect this to be a self-fulfilling prophecy as more people buy into this thesis.\u201d <\/p>\n<p>But this is different from a report card or a manipulation gauge that attaches a number or a grade to a government\u2019s performance. BTC is still too volatile and thinly traded to be useful for that at present, Freeman opined, adding:<\/p>\n<blockquote><p>\u201cI think BTC will be more of a lagging indicator of the lack of faith in monetary policy, at least in the short term. Though, what we\u2019ve all learned over the past years is that it is a bad bet to underestimate the growth of BTC and its effect on global financial markets.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Times_are_changing\"><\/span>Times are changing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>It\u2019s worth remembering, too, as Jeff Dorman, chief investment officer of Arca, told Cointelegraph, that since the United States embraced an \u201caggressive monetary policy\u201d in 2009, investors have been looking for ways to hedge against inflation. They\u2019ve tried buying gold, and also shorting treasuries and\/or European government bonds. \u201cNone of the traditional methods have worked,\u201d said Dorman, adding: \u201cBitcoin has been the only winner for the past decade.\u201d <\/p>\n<p>Recent government stimulus measures probably strengthen the argument for Bitcoin, Dorman continued, but BTC has made little impact upon policymakers due to its \u201csmall size and limited touch size.\u201d But the times are changing. This past week, Deutsche Bank analysts declared that Bitcoin had grown \u201ctoo important to ignore,\u201d and with so many different types of investors gravitating to BTC now \u2014 banks, brokerages, insurance companies, hedge funds, corporate treasurers, individuals \u2014 Dorman said: <\/p>\n<blockquote><p>\u201cThey have no choice but to pay attention. So, I don\u2019t think Bitcoin is a report card, nor driving any policy decisions \u2014 but if it continues to penetrate all facets of finance, then it will become a gauge that needs to be monitored.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Use_cases_cant_be_forced\"><\/span>Use cases can\u2019t be forced<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>But if BTC isn\u2019t yet a gauge or feedback loop, what is? How is one to recognize if governments are losing their grip? There\u2019s always the traditional inflation indexes, such as the Consumer Price Index and Producer Price Index \u2014 ie., the official measures \u2014 Mauro F. Guill\u00e9n, Zandman professor of international management at the Wharton School, told Cointelegraph, where \u201canything above 3%\u20134% starts to be a problem.\u201d He added:<\/p>\n<blockquote><p>\u201cCryptos are very small right now compared to the trillions and trillions of dollars in circulation. Moreover, they are just an investable asset. They are not yet used as a <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ized form of payment or as a unit of account.\u201d<\/p><\/blockquote>\n<p>In short, given that Bitcoin is only 12 years old, volatile and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.buybitcoinworldwide.com\/how-many-bitcoin-users\/#:~:text=With%20one%20study%20suggesting%20~25,the%20world's%20population%20owns%20bitcoin.\">owned<\/a> by only 1.3% of the world\u2019s population (perhaps), expecting that it can become a report card on government monetary policy seems premature. <\/p>\n<p>BTC today is a promising store of value, a growing investment asset class, and one day, it may have other uses, including as a medium of exchange and\/or unit of account, but those future use cases will emerge organically and probably can\u2019t be forced. <\/p>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/bitcoin-s-new-use-case-a-report-card-for-how-the-us-handles-the-dollar\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Bitcoin\u2019s new use case? A report card for how the US handles the dollar &#8221; Throughout the middle of March, many Americans received stimulus checks from the government, and while the payments \u2014 $1,400 for every U.S. citizen earning less than $80,000 annually \u2014 will be a blessing for millions in desperate economic straits&#8230;<\/p>\n","protected":false},"author":1,"featured_media":207532,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDMvZTkwZTViZjMtY2RjZC00MzdmLTgyZmUtZGM5ZjVlZDc4NWI4LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,76153,117,70550,70934,67874],"class_list":["post-207531","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-dollar","tag-business","tag-federal-reserve","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/207531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=207531"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/207531\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/207532"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=207531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=207531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=207531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}