Biden Administration’s Economic Report on Bitcoin and Crypto: Highlights and Criticisms
The Biden Administration recently released an economic report that discusses Bitcoin and crypto assets in detail.
The report mentions Bitcoin and crypto a total of 305 times and has caught the attention of many due to its criticisms and observations about these digital assets.
Here are some of the highlights of the report:
Ethereum’s proof-of-stake mechanism
The report tracks Ethereum’s switch to a proof-of-stake consensus mechanism. However, it lacks a fundamental understanding of how Bitcoin’s consensus is established, referring to the decentralized network as if it were a company with the ability to make official statements.
Bitcoin’s energy consumption
The report criticizes BTC’s energy use but fails to compare it to the banking industry, which the asset was designed to replace. It also does not mention that miners are incentivized to use renewable energy to save on costs or that up to 59.5% of BTC mining already relies on renewable sources.
Bitcoin’s price volatility
The report cites Bitcoin’s price volatility at an awkward time amid a government-induced banking crisis that has forced many Americans to realize that banks do not hold onto their cash, and deposits above $250,000 are not insured by the FDIC.
The volatility means that anyone using BTC to store their savings is subject to high-volatility risk in their purchasing power.
READ MORE: Cryptos Stay Green Amid Banking Slump and USDC Depegging, According to Kaiko Analysts
Crypto assets are here to stay
Despite the criticisms, the report states that the crypto industry is likely here to stay. It warns of the risks presented by crypto assets, including excessive speculation, high leverage, run risk, environmental harm from crypto asset mining, and fraudulent activities that harm retail investors and corporations.
Scarcity of Bitcoin
The report cites the asset’s scarcity and maximum supply of 21 million coins. However, it declares that paper money is superior due to the existence of central banks, which print cash with impunity. Sovereign money, in the form of the US dollar, is backed by a “trusted” institution—the central bank.
Overall, the report presents a mix of criticisms and observations about Bitcoin and crypto assets. While it acknowledges their existence and potential, it warns of the risks they pose and calls for policymakers to consider these risks to avoid a potential economic crisis caused by crypto assets.