Opinion: Bitcoin will never replace fiat, unlike CBDCs

Former Greek finance minister Yanis Varoufakis told Greek Reporter in an interview that the limited issuance of the first cryptocurrency makes it unsuitable to replace fiat money.

“Given its fixed supply and the absence of a democratic mechanism to determine who and how many bitcoins they receive, it creates a kind of feudalism, governed by early adopters,” he explained.

In his view, the issuance capped at 21 million BTC is not only the greatest strength but also the main weakness of digital gold.

The fixed supply of the first cryptocurrency also makes it ill-suited for crises, added the former Greek finance minister.

“Suppose Bitcoin replaced fiat money with a magic wand. That would be a catastrophe,” Varoufakis said.

He explained that governments would be unable to increase the money supply in a pandemic because the first cryptocurrency has a finite issuance.

The former Greek minister stressed that Bitcoin will never be able to, and should never become, a currency, unlike CBDCs. The latter would spare the public from the third party in the form of commercial banks, he added.

“We need to cut out the middlemen: Fed provides money to banks, which they lend to corporations. And if the Fed, in its bid to stimulate the economy, were to provide every taxpayer in the United States with a digital account? Money would go directly to the Fed,” he explained.

The Bank for International Settlements called CBDC a concept whose time has come.

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