Academic & economist John Vaz believes economic mismanagement could result in BTC functioning like cigarettes in prison amid financial crisis.
In an interview with Cointelegraph, John Vaz, economist and academic at Monash University, asserts that the outlook for Bitcoin (BTC) and cryptocurrency is dependent on the response from governments to the current economic crisis.
John also emphasizes the importance of wider adoption and acceptance of cryptocurrencies, likening Bitcoin’s possible role as a money commodity in the context of deepening economic crisis to cigarettes in prisons.
Bitcoin will correlate with mainstream markets in short term
In the short term, Vaz is unsurprised that the price of Bitcoin has dropped, asserting that Bitcoin has suffered from the same liquidity crisis as most markets. “When things go into chaos, people dump them,” he states.
John emphasizes that “everything has taken a downturn at the moment,” noting that only a handful of “commodity-type assets” like gold that are seen as ‘safe havens’ are not seeing the same rapid price declines.
The economist describes perceptions of the U.S. dollar as a safe haven as “bizarre,” arguing that the greenback “is probably the most poorly managed asset.”
“The bizarre thing is that the U.S. dollar is seen as a safe haven and it’s probably the most poorly managed asset […] given some of the expenditure that’s going on in the U.S. — huge unfunded tax cuts given to corporate sector and so on, large defense spending, and now even larger spending for economic stimulus. So how will that be dealt with?”
Economic mismanagement may reveal ‘opportunity’ for Bitcoin
However, amid the rampant economic mismanagement, Vaz identifies an “opportunity” for crypto assets to emerge as “an alternative currency with some stability and protection from the basement.”
John argues that the same economic policies “that motivated the creation of Bitcoin and cryptocurrency in the first place” are “going to be running on steroids post-crisis.”
He asserts that some countries will have a situation where “they want to protect their currency from devaluation [and] implement currency controls,” asserting that “cryptocurrency could become very attractive for a lot of markets as a way of subverting currency controls.”
Vaz also states that cryptocurrencies are more equitable than fiat currencies, as “you don’t have banks or governments hijacking losses and privatizing the profits,” adding: “There is less opportunity for those sorts of things with cryptocurrency, so that makes them attractive potentially as an alternative form of money.”
Bitcoin as ‘prison cigarettes’ amid economic downturn
However, Vaz emphasizes that Bitcoins’ success will also depend on whether cryptocurrency attains wider adoption, particularly among institutions.
“Historically, money has value because people use it and believe it’s worth using. Cigarettes are money in prisons — no one thinks of it as money, but you can get someone probably beaten up, or killed, or whatever the criminals do for cigarettes. Now, it isn’t worth much more than cigarettes, but in prison, it’s probably as good as gold.”
Ultimately, John concludes that “how the government and how the economy is managed are going to be crucial in the Western world, and [may] create the opportunity for cryptocurrency,” he states.
For John, whether crypto will succeed is “completely dependent on how many prisoners are willing to take the cigarettes.”
Source: , CoinTelegraph
Articles listed with Cash Tech News as the author are either general information, or may have been imported from another website, to bring our readers a rich media experience that encompasses articles that we find interesting, as well as those curated by others.
The views and opinions expressed here are for informational purposes only, and should not be confused with professional financial advice. These opinions are solely those of the author and do not necessarily reflect the views of CashTechNews.com. Every investment and trade involves risk. You should conduct your own research, and contact your professional financial advisor before making any investment.
Corrections, feedback, and ideas should be submitted through the website contact form.