Government-Issued Digital Assets Will Be Backed by Bitcoin: Quant Analyst
- An Ikigai analyst started a tweetstorm that details the birth of the petrodollar.
- The analyst also covered the fiscal irresponsibility of the federal government.
- He said that once inflation kicks in, people can rely on bitcoin to save them from hyperinflation.
Earlier this month, the Bank of England announced that the central banks of the United Kingdom, Canada, European Union, Japan, Sweden and Switzerland are in collaboration with the Bank of International Settlements for joint research on central bank digital currencies (CBDC). As the group studies the potential use cases of CBDC in their respective jurisdictions, one analyst is already thinking of the role that bitcoin will play in the digitalization of currencies.
Hans Hauge, a crypto asset investment analyst at Ikigai Fund, believes bitcoin will be the number one commodity in the future. He says that in the next decade, it will surpass the value of a median single-family home in the United States.
Petrodollar May Be on the Verge of Collapse Says Hauge
On Saturday, Ikigai’s senior quantitative researcher took to Twitter to share his in-depth knowledge of the current financial system. Hauge began the tweetstorm by explaining how the U.S. government abandoned the gold standard in 1971. The move by former president Nixon caused the inflation rate to climb to 11% in 1974.
The analyst then wrote that the U.S. government struck a deal with the Saudis to curb inflation. The petrodollar was created as oil purchases were settled in dollars. Over 40 years later, the rise of the petroyuan on top of the de-dollarization movement of the EU and Russia are threatening the greenback’s status as the world reserve currency.
Fiscal Irresponsibility Hastens the Decline of the U.S. Dollar
To make matters worse for the greenback, Hauge said that the fiscal irresponsiblity of the U.S. government has left the Federal Reserve with no recourse but to print more money to the tune of $1 trillion per year.
The analyst then explained that the only reason why the U.S. government can print more money is because of low interest rates. Hauge said that once interest rates creep up, the federal government will go under.
The quant researcher stressed that inflation will eventually rear its ugly head despite the best efforts of central banks around the world to cut interest rates. When that happens, bitcoin will save people from hyperinflation.
Hauge: Bitcoin to Back a New World of Emerging Digital Currencies
According to Hauge, there has never been a currency that can act as a medium of exchange and a store of value at the same time. These properties make the cryptocurrency the top option for people who don’t want to see their wealth vanish due to hyperinflation. Mati Greenspan, founder of Quantum Economics, echo this view. He told CCN,
The strictly limited supply of bitcoin ensures that it is deflationary by design.
As countries consider digitizing their currencies, Hauge said it is doubtful that state-backed virtual currencies will provide people with freedom and property rights. He continued by explaining that bitcoin is a non-sovereign asset that can settle both large and small transactions with incredible speed. It can also provide security and censorship resistance.
In the end, Hauge said that bitcoin will likely act as the new gold that backs government-issued currencies. In ten years, he predicts that the digital asset will be worth over $236,900.
There are many reasons why bitcoin can skyrocket to over $200,000. Most of them are tied to bitcoin’s properties. Hauge may be painting a doomsday scenario but he might also be foretelling how people will revolt peacefully through bitcoin.
Disclaimer: The above should not be considered trading advice from CCN.com. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
This article was edited by Sam Bourgi.