Forbes Media director and editor-in-chief Steve Forbes has explained why bitcoin and other virtual currencies, for now, cannot replace the dollar but suggested that a fixed value in cryptocurrencies could make them a real challenge for the US dollar.
Bitcoin has become the most popular virtual currency after increasing its value on several occasions, breaking several records, as this cryptocurrency has increased almost eightfold since March to $40,000.
But this is not enough for bitcoin and other cryptocurrencies to be considered as substitutes for the dollar, according to Forbes, because the virtual currency is too volatile to use as money. For example, if a person had obtained a mortgage worth $250,000 in bitcoin last March now at current cryptocurrency prices, that person would be owing the bank about $2 million.
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He added that the supply of money must be expanded to meet the needs of a growing economy, but this is not the case with bitcoin because the maximum amount that can be extracted is fixed.
Forbes concluded that for cryptocurrencies to represent a real challenge to the dollar or other currency issued by a government, it is essential that it has a fixed value, which is preferably linked to gold or the Swiss franc, in this way its supply would grow as the numbers grow and economies grow.