Since its inception in 2009, Bitcoin has attracted both adherents and detractors nevertheless, Steve Hanke can be counted as the biggest critic of bitcoin who has been comparing the dominant cryptocurrency to the Dutch tulip frenzy since 2013.
Steve Hanke is a senior scholar and director of the Cato Institute’s Troubled Currencies Project, as well as a professor of applied economics at Johns Hopkins University. He has also provided advice to other countries on how to deal with volatility and currency stability.
On Twitter, Hanke has once again slammed Bitcoin, stating that only corrupt Latin American governments are prepared to use it. The disrespectful remark has sparked outrage in the Bitcoin community, with several members accusing Hanke of politicizing an irrelevant connection.
Ever since the news broke that El Salvador had become the first country to adopt bitcoin as a legal tender, Hanke has been one of the fiercest opponents of the country’s decision. He stated in an interview that
The President, Congress and the one who votes for adopting Bitcoin as El Salvador legal tender have entered the Hankies dictionary of economic stupidity.
The economist stated that because he believes that Bitcoin cannot be easily and cheaply converted into the U.S. dollar and the economy can collapse.
The math of the bitcoin enthusiasts just doesn’t add up. Traditional money-transfer providers have a true cost of only 2.85 percent for remittances. Remittances sent using bitcoin, on the other hand, will cost Salvadorans far more than 5% to acquire the dollars they need.
In an article published in March 2021, Hanke said that Bitcoin’s designation as a “cryptocurrency” is a misnomer. A currency is characterized by four fundamental features. To qualify, it must be a unit of account, must be a standard for deferred payment, must be a store of value, and must serve as a medium of exchange. It should not be viewed as a currency but as a speculative asset with a fundamental value of zero.
Apart from focusing on Bitcoin’s potential failure in El Salvador, Hanke recently posted an article authored by Bitcoin.com News author Terence Zimwara. According to the report, The Central Bank of Nigeria (CBN) has been considering the possibility of the country adopting a digital currency before the end of the year, Hanke disagreed with the CBN’s evaluation, saying that if it was like El Salvador’s proposal, it would likely lead to ruin.
If Nigeria’s digital currency ambitions are anything like El Salvador’s Bitcoin scheme, they will fail. Rather than experimenting with crazy ideas, Nigeria should establish a USD-denominated Currency Board, similar to the one it had from 1913 to 1959.
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