Popular macroeconomics expert Lyn Alden isn’t sold on Bitcoin’s (BTC) functionality as a medium of exchange yet.
Alden explains in a new analysis that people with specific payment issues like capital controls and payment de-platforming find BTC useful, but they can often also use less-volatile stablecoins as short-term solutions to those same problems.
“There are some very well-meaning Bitcoin proponents trying to convince Bitcoin holders to spend it more. I don’t particularly view that as a sustainable practice. Bitcoin is not going to catch on as a charity. In order for spending it to catch on persistently at scale (i.e. not just billions of dollar-equivalents in annual global medium-of-exchange volume, but trillions), it has to solve problems for spenders and/or recipients that other solutions are not doing. And at this stage of adoption, that’s not necessarily the case, especially with capital gains taxes applicable to every single transaction and with options like stablecoins for near-term spending needs where volatility needs to be low.”
Alden says Bitcoin instead has value due to its “optionality.”
“Owning a sound, liquid, fungible, portable store of value that is going through its adoption phase gives the owner some perks, or options, that other assets do not. Mainly, they can bring their store of value wherever they want in the world without relying on central counterparties and credit. It also allows them to make crossborder payments, including to deplatformed recipients, through substantial friction even if they are staying put where they are. They might not be able to ubiquitously pay with it, but if need be they can find ways to convert it to local currency in most environments that they find themselves in, and in some cases can indeed pay with it directly.”
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