Fed President Questions Bitcoin’s Hard Cap, Expresses Concerns
As bitcoin’s price soars to new heights, the Federal Reserve (Fed) President Neel Kashkari has raised concerns about its hard cap and potential utility.
Kashkari’s Response to Bitcoin’s Hard Cap
“Hard Cap Could Go Down to Zero”
When asked about the Fed’s potential investment in bitcoin, Kashkari questioned its fixed supply limit. He compared bitcoin to Beanie Babies, stating that its hard cap could potentially be “zero” and likened its value to a passing fad.
Bitcoin’s Limited Utility
Kashkari emphasized bitcoin’s lack of “actual utility” in the economy, suggesting that it primarily serves as a collectible or speculative asset. He expressed concern that it is often used to evade banking regulations and facilitate illicit activities.
Concerns from a Consumer Perspective
The Fed president warned consumers about the risks associated with bitcoin. He highlighted the potential for fraud, hype, and confusion surrounding the cryptocurrency and advised caution.
Response from Bitcoin Advocates
Kashkari’s comments have drawn mixed reactions from the cryptocurrency community. Alex Gladstein, chief strategy officer of the Human Rights Foundation, called his remarks “incredible” and suggested that they might hint at a potential use case for bitcoin in non-advanced democracies or dictatorships.
Gladstein also highlighted numerous legitimate use cases for bitcoin in advanced democracies, ranging from financial management to energy efficiency and privacy protection.
Fed’s Interest Rate Concerns
Kashkari, who is known for his hawkish views on interest rates, expressed concerns about the Fed’s potential inability to cut rates this year if inflation persists.
The recent bitcoin rally has been partly fueled by market expectations of rate cuts, given the U.S.’s growing debt burden. However, Kashkari’s comments have cast doubt on this expectation.
Conclusion
Fed President Neel Kashkari’s skepticism towards bitcoin’s hard cap and utility has sparked debate within the cryptocurrency community. While bitcoin advocates emphasize its potential use cases, Kashkari’s concerns highlight the risks and challenges associated with this volatile and speculative asset.