Historian Niall Ferguson Says Bitcoin Is Winning The Covid-19 Currency Revolution
Niall Ferguson, historian and senior fellow at Stanford University’s Hoover Institution, says that bitcoin is winning the Covid-19 monetary revolution. Praising virtual currency as a great place for the rich to store their wealth, Ferguson also notes that bitcoin’s resistance has forced critics, as well as institutional investors, to alter their views on leading crypto.
Decreased use of cash
Ferguson names bitcoin basher Nouriel Roubini along with a financial journalist as some of the critics who now have doubts about bitcoin. In an opinion piece, Ferguson explains that before Covid-19 hit, a financial revolution was already underway with cash as the main victim.
To back up his belief that a financial revolution is taking place, the historian says that in “some parts of the world, not just China but also Sweden, almost all payments are now electronic.” In the United States, debit card transactions have surpassed cash transactions since 2017. While in Latin America and parts of Africa, cash is giving way to cards and mobile money.
However, Ferguson says that Covid-19, like what other pandemics have done in the past, has accelerated the current monetary revolution. By highlighting the narrative that bitcoin is now a better hedge against inflation, Ferguson compares the digital asset to the US dollar and gold.
In the comparison, Ferguson says that “the dollar spot index is down 4% since January 1. Gold, by contrast, is up 15% in dollar terms. But the dollar price of a bitcoin has risen 139% so far this year. “
Next, the historian explains the factors behind bitcoin’s performance as follows:
“What could have taken 10 years has been achieved in 10 months. People who had never risked an online transaction before were forced to try, for the simple reason that banks were closed. Second, and as a result, the pandemic significantly increased our exposure to financial surveillance and financial fraud. Both trends have been good for Bitcoin. “
The digital gold narrative
Ferguson, who has previously argued that bitcoin will never hit zero after its crash in late 2017 and 2018, duplicates this argument in an updated version of his book. In the book, he states that “bitcoin had established itself as a new store of value and investment asset, a type of ‘digital gold’ that offers investors guaranteed scarcity and high mobility, as well as low correlation with other asset classes. “.
Meanwhile, the historian also addresses the adoption of bitcoin by high-net-worth individuals as well as institutional investors. The hug has sustained a bull run that has seen bitcoin break past highs. In the past, Ferguson argued that “if millionaires collectively decide to keep just 1% of their wealth in bitcoins,” the price would hit $ 75,000.
Ferguson acknowledges that bitcoin has three obvious flaws and these include “non-trivial” transaction costs, poor transaction throughput, and its “slow” use as a means of payment. However, these disadvantages are offset by two unique characteristics of bitcoin: scarcity and sovereignty.
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