US President Joe Biden released the government’s economic report there, in which Bitcoin plays a major role. BTC is mentioned 75 times in the report, which tries to denigrate Bitcoin and promote the United States Central Bank Digital Currency (CBDC) as a better solution.
In a section titled “The Perceived Appeal of Crypto Assets,” the White House spent many pages describing how Bitcoin works before denying the main cryptocurrency functions as money by definition. In particular, BTC allegedly fails to fulfill two of the three characteristics of money.
“Bitcoin Is Not Money”
First, the report states that Bitcoin does not correspond to the characteristics of the unit of account because the value of goods and services is not in BTC, but in US dollars, and conversion is required. Addressing the question of whether Bitcoin can be a medium of exchange, the White House wrote that BTC is “not as effective as a medium of exchange” as the US dollar.
“The strength of the US dollar comes from several important factors, such as faith in government institutions and the legal system, but cryptocurrencies lack these factors,” the report said. Third, the report also rejected BTC’s characteristic store value due to “significant volatility.”
For example, the value of Bitcoin (relative to the US dollar) increased by more than 1,000 percent from March 2019 to March 2021, and then decreased by more than 70 percent from November 2021 to October 2022. This volatility means that anyone who uses Bitcoins. to keep savings subject to the risk of high volatility in purchasing power.
For Bitcoiners, accusations should be more than flimsy given the massive devaluation of the USD against Bitcoin, record high inflation, the US banking crisis, bailouts for banks, etc. “What the White House can’t say, of course, is the value of Bitcoin in protecting you from abuse of authority, monetary or otherwise,” Troy Cross write in response to the report.
As one might expect, the White House also attacked Bitcoin mining as an energy-guzzling monster in a report. The report references a 2022 Cambridge University study which claims that Bitcoin mining will use more energy in 2021 than several countries, including Finland, Belgium and Chile. Any differences are avoided, while the report mentions other environmental damages such as noise, air and water pollution.
“Not all crypto mining operations use the same amount of power. […] Despite Ethereum’s switch to proof-of-stake, Bitcoin has not announced plans to make the same change,” the report continues.
Dennis Porter, the founder of SatoshiAct, who supports the positive effects of BTC mining, wrote disillusioned that it became clear that the voices of reason in Bitcoin and digital assets have left the White House. “I hope he comes back.”
White House: “Bitcoin has not announced plans to make similar changes” to proof-of-stake. pic.twitter.com/97sKw6DKWa
– Dennis Porter (@Dennis_Porter_) March 21, 2023
CBDC is a better Bitcoin, according to the White House
In complete contrast, the report states that the Central Bank Digital Currency (CBDC) represents the possibility of introducing digital money. “When operating under the supervision of trusted authorities, these two mechanisms have the potential to realize many of the benefits that crypto asset developers have been promised,” the report said and further explained:
A potential US CBDC could also help support other policy goals. For example, a potential US CBDC could help ensure that the payment system complies with the principles of human rights, democratic values, and privacy.
Dave Birnbaum, Product Director at Coinbits is going strong word to report. In a Twitter thread, he wrote that the arguments in the report summed up the banking panic of 1907, when private bankers pooled resources to save the system.
“This is said to be a lesson that the government should have that power, so they created the Fed so that it can be used by private citizens,” said Birnbaum, who went on to discuss that the section on cryptocurrencies can be understood as “Microaggression, which shows that those who think digital assets appeal to parties like Marxian false consciousness.”
Mike Novogratz, CEO of Galaxy Digital, responded on tweet:
Maybe they should refund all the taxes they have paid for the past 10 years on crypto trading. They are wrong! $BTC is a report card on economic management. And up it tells us something.
At press time, the BTC price was at $28,103, driven by the US banking crisis and renewed monetary stimulus by the Federal Reserve.
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