The head of the Federal Reserve called Bitcoin a competitor to gold. What exactly does this comparison mean for the cryptocurrency?
Bitcoin has come a long way since its inception in 2009: from an unknown phenomenon in a small circle of crypto-punks to a subject of discussion at the highest levels of the US and the world at large. Now, Federal Reserve Chairman Jerome Powell has drawn parallels between Bitcoin and gold in a fresh speech at the DealBook Summit event. Powell openly believes that Bitcoin could very well compete with gold for the status of the primary instrument for capital preservation, but is reluctant to compare the cryptocurrency to the dollar.
How is Bitcoin similar to gold?
According to Powell, Bitcoin is most often not used as a means of payment.
Are people really using Bitcoin as a speculative asset? It’s more like gold. It’s just that Bitcoin exists in virtual form.
Bitcoin is indeed chosen by investors as a store of value instrument. However, this doesn't mean that no one uses cryptocurrency to pay for goods and services.
For example, one of the biggest hits of the previous bullrun in 2021 was Tesla's endorsement of BTC, which began accepting the coins to pay for its own cars. Although it didn't last long, there were still people willing to buy transport with bitcoins.
Bitcoin payment on Tesla’s website, available in early 2021
With that said, BTC cannot be considered a direct competitor to the US currency. Powell continues.
It is not a competitor to the dollar. However, Bitcoin could very well compete with gold. I think that is exactly the state of affairs.
Weekly chart of the gold exchange rate
During the event, journalist Andrew Ross Sorkin also asked Powell about his thoughts on the crypto market as a whole. The answer was as follows.
The Fed would like to ensure that interactions between crypto businesses and banks do not threaten the health and well-being of the banks themselves. In addition, the Fed does not regulate cryptocurrencies directly.
That said, Powell himself is unlikely to invest in cryptocurrencies – at least in the near future. He told reporters that as the head of the Fed, he simply has no right to invest in crypto, as it would lead to a conflict of interest.
Fed Chairman Jerome Powell
According to The Block’s sources, Powell said in June 2023 that Bitcoin has “sustainable strength.” And today, the value of the major cryptocurrency rose above the $100,000 line for the first time in history. This was largely helped by Donald Trump’s victory in the US presidential election, which took place in early November.
One of his campaign promises was to create a more favourable environment for the regulation of cryptocurrencies. It seems that the politician is gradually starting to confirm his words with actions: the day before, Trump chose former SEC commissioner Paul Atkins as chairman of the Securities and Exchange Commission.
Atkins is considered friendly to cryptocurrencies and served on the board of directors of The Digital Chamber in 2020. And his early comments on digital assets, which we recalled in a separate article today, clearly confirm this.
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The development of the digital asset industry is evident in another principle, namely the increasing number of entrepreneurs from this sphere. They now make up almost a third of Forbes’ “30 under 30” list in the finance category. Founders of cryptocurrency companies – 10 men and 4 women – took nine of the 30 spots. And in some cases, one spot went to more than one participant.
One of the most notable additions to Forbes’ 2024 ranking is 26-year-old Polymarket founder Shane Coplan, whose decentralised platform caused a sensation this year by allowing betting on the United States election and other important world events.
Polymarket CEO Shane Coplan
Many founders of decentralised exchanges also made the list – including Ostium Labs co-founders Caledora Kiernan-Linna and Marco Antonio Ribeiro, and Osmosis founders Sunny Aggarwal and Dev Ojha.
Drift Labs co-founder Cindy Leow was included in the ranking, Cointelegraph reported. Another place was taken by Sorush Ghodsi Bushehri, Stefan Stokic and Jake Sylvester, the trio of founders of Cortex Labs, which aims to create a blockchain with support for artificial intelligence.
Forbes also recognised Tux Pacifica, founder of Entropy, a blockchain-based AI company.
Forbes ranking in the finance category
In addition, the updated rating includes co-founders of the decentralised protocol Omni Network Austin King and Tyler Tarsey. Another nominee is Jason Zhao, co-founder of the Story intellectual property tokenisation platform.
While the ranking looks good, it’s still a far cry from the record of industry representation in 2021, when Forbes ranked 21 “blockchain leaders and innovators.”
Most interestingly, that year’s list included Caroline Ellison and Sam Trabucco, then executive heads of trading firm Alameda Research and the top of the so-called FTX crypto empire. Both later became involved in the high-profile bankruptcy case of related crypto exchange FTX, whose founder Sam Bankman-Fried was sentenced to 25 years in prison.
Jerome Powell's comments on Bitcoin weren't the best, as he still brought up speculation at the mention of the cryptocurrency. However, the comparison of BTC to gold from the head of the US Federal Reserve is expensive. Either way, Powell is aware of what's going on with the coin and somehow recognises its potential. On top of that, the precious metal continues to be the most popular asset for store of value, so the comparison can also be considered a plus for the crypto.
For more interesting stuff, check out our cryptocurrency chat room. Be sure to check in there to stay up to date with the current bullrun in the coin niche.
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