US President Donald Trump revealed his pejorative view on cryptocurrencies on Thursday, claiming that they are “based on thin air”.
While on the surface the attack may seem like a negative for Bitcoin and the digital asset space, it actually exemplifies why cryptocurrencies were created – to take on traditional financial systems.
In fact, the price of Bitcoin actually rose by 5% following Trump’s comments, spiking to $11,700 after a slump to below $11,000.
Fed chair compares Bitcoin with gold
Earlier this week, Federal Reserve chairman Jerome Powell likened Bitcoin to gold before stating that it’s possible Bitcoin may become a reserve currency in the future.
“Bitcoin’s a good example. Almost nobody uses Bitcoin for payments. They use it more as an alternative to gold. It’s a store of value, a speculative store of value like gold,” Powell explained.
“People have been talking about this [becoming a reserve currency] since cryptocurrencies emerged, but we haven’t seen it. That’s not to say we won’t see it, and if we do see it we could return to an era in the United States where we had many different currencies, in the so-called national banking era.”
Unsurprisingly, and not for the first time, Trump disagreed with Powell. The pair have been battling it out throughout 2019, with Powell facing criticism from Trump for not cutting interest rates.
‘Crypto facilitates unlawful behaviour’
One of Trump’s remarks about Bitcoin was that it “facilitates unlawful behaviour”.
The irony is that the majority of global crime is facilitated through the US dollar, which was reiterated by this week’s seizure of 20 tons of cocaine from a ship owned by banking giant JP Morgan.
Through the use of blockchain forensics, Bitcoin and other cryptocurrencies are actually far more traceable than cash, which leaves no digital footprint.
Each and every Bitcoin transaction, whether illicit or not, is logged on an immutable blockchain that is tamper-proof for the rest of history.
Conversely, cash can change hands under the table without foresight from law enforcement, regulators, or financial institutions.
Discussion is good regardless of the opinion
The fact that the president of the United States is even talking about Bitcoin is a huge step forward for the digital asset class.
Previously, Trump has been known to decline any comment on Bitcoin, so his response on Thursday – albeit negative – suggests that Bitcoin may pose a viable threat to the unstable US economy and dollar.
Coinbase CEO Brian Armstrong claimed that Trump’s comments were a “great achievement” for Bitcoin.
“Achievement unlocked! I dreamt about a sitting US president needing to respond to growing cryptocurrency usage years ago. ‘First they ignore you, then they laugh at you, then they fight you, then you win’. We just made it to step 3 y’all,” he wrote on Twitter.
In 2017, we saw nations like China take a huge stance on cryptocurrencies by banning Bitcoin and ICOs. This, at the time, caused a severe drop in the value of Bitcoin – a stark contrast to today’s response in the market.
It shows that regardless of the bureaucratic opinion of politicians, Bitcoin remains unperturbed and continues to look bullish moving into the next decade.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.