Category Archives: Federal Reserve Bank

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Bitcoin’s Price in Danger as Altcoins Become More Efficient, Says Federal Reserve Bank

Federal Reserve Bank

In a recent article, the Federal Reserve Bank of St. Louis has reportedly predicted the future of Bitcoin. The authors David Andolfatto and Andrew Spewak stated that the lower price of Bitcoin can be linked to the ever-growing supply of the altcoins.

According to the article, there might be three possible predictions for the Bitcoin’s price. It could be zero, indefinite, infinite appreciation or anywhere between it.

In essence, Bitcoin has a volatile and speculative nature. Moreover, a limited supply does not necessarily mean that the value would keep on increasing forever. The value is indeed linked to the demand. Many new coins, having attractive attributes for the market, are being launched on a daily basis. Given the case that Bitcoin was the only cryptocurrency, all money would have flown into it. However, it happened only for a brief time in the history of the cryptocurrencies.

On the other hand, Bitcoin maximalists have maintained that Bitcoin has the ability to overcome all the improvements made by altcoins. Nevertheless, according to the Federal Reserve economists, this is not a reality. Apart from the supply and demand issues, there are other complex factors too that govern the price of Bitcoin.

The super liquidity of Bitcoin makes it on-ramp and off-ramp for other currencies. At the moment, Ethereum has been used for the ICOs purpose instead of Bitcoin. It is important to note that Ethereum has a large supply. Therefore, its lower price is justified. This is a clear example of how altcoins may affect Bitcoin.

In the future, it is expected that people will adapt to the blockchain technology via banking applications. Along with that, other decentralized applications may also get public approval. This situation would further enhance the demand for tokens like Ethereum, NEO, TRON or Aelf, which support such blockchains. Hence, Bitcoin might be lagging behind altcoins in such a case.

However, the Federal Reserve economists still believe that the price will not touch zero. An important factor to take into account is that one aspect of Bitcoin’s value, its utility. As other coins develop more functionalities, Bitcoin’s future might be in danger.

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Ex-US Presidential Candidate: Gold and Crypto Should Replace US Dollar

Ron Paul, a previous US presidential candidate and now retired but respected politician, has suggested that a combination of gold and cryptocurrencies could eventually replace the US dollar, writes Bitcoinist.

Paul, who ran for the US presidency in 1998, serving in the US Congress for Texas several times between 1976 and 2013, once said famously:

“I am concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no – I say it is something wrong with the dollar.”

Paul, a known critic of the federal government’s fiscal policies, especially the existence of the Federal Reserve, sees a worldwide monetary crisis as inevitable. He suggests that the world is currently in a “dangerous financial situation”.

“This is why the call for monetary reform is getting louder. These dangers prompt a growing number of people to plan for an alternative monetary system. This is good news,” he argued.

The ex-congressman has been active in encouraging monetary change, backing his views with action, encouraging people to invest in Bitcoin-based retirement accounts. His son Senator Rand Paul, who followed in his father’s footsteps running as a presidential candidate, even accepted Bitcoin contributions during his presidential campaign.

Paul suggests that competition with the dollar should be legalized, using an alternative model combining gold and cryptocurrencies using blockchain.  He acknowledges that a similar process is already underway with many countries as they look to their own currencies.

He refers to the Federal Reserve Bank, the Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission as protectors of “monetary elites”. Paul has clearly changed his views on cryptocurrency since comments he made in back 2013 when he said of Bitcoin:

“If I can’t put it in my pocket, I have some reservations about that. But it has been designed in the free market. If it is a means of exchange, it would not ever be illegal. You shouldn’t regulate it in the free market, but I do not think it fits the definition of money, which has been around for 6,000 years.”

 

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