Patrick Byrne, the CEO of leading electronics retailer Overstock, noted in an interview with Fox Business that the market currently is fixated on the price trend of bitcoin. But, the global finance industry should be more concerned with how low the global fiat currency system can plummet.
“The real question is not how high can bitcoin go. The real question is how low can fiat currency go; and at the end of the day all fiat currencies have gone to zero, and that’s because they end up with irresponsible money printing,” said Byrne. Byrne’s comments follow on from the retailer’s announcement it would hold 50 percent of the bitcoin spent with the merchant in August 2017.
In an interview with CNBC in October, Goldman Sachs CEO Lloyd Blankfein offered a unique insight into the cryptocurrency industry which many investors have failed to acknowledge in the past few years.
When the US government abandoned the gold standard in 1971 and abruptly introduced the fiat currency system, the vast majority of bankers, general consumers, and merchants struggled to adopt the new payment system. The US dollar was supposed to be worth a certain amount of gold prior to the dissolution of the gold standard. However, beginning in 1971, the US dollar was worth whichever value the government imposed at the time.
As such, Blankfein stated that he has an open mind in regards to bitcoin and the transformation of the global monetary system, considering that previous monetary systems have been replaced by more efficient, transportable, and secure stores of value.
“A five dollar gold coin was worth five dollars because it had five dollars worth of gold in it. Then they issue paper money that is backed by gold in the treasury. Then one day, they issue paper money that does not have the backing of gold. There was no pledge that if you turn it in, I’ll give you five dollars of gold. It is fiat money. I say this piece of paper is worth five dollars and so, therefore, it is five dollars, and a lot of people did not take that for a long time. But, now they do without question. You move a little bit further, and you get bitcoin that is not a fiat currency so I don’t trust it and I don’t like it. On the other hand, if it works, I say maybe it was a natural progression from hard money to digital money,” explained Blankfein.
Already, in 2017 alone, the global economy has seen the collapse of two government-issued fiat currencies in the Venezuelan bolivar and Zimbabwean dollar. The currency of Zimbabwe has deteriorated to the point in which residents have started to purchase bitcoin with extreme premiums, at a price above $12,000.
For the majority of the global population, the collapse of the fiat currency system seems unlikely in major economies. But, Byrne noted that the US dollar would decline in value over the long run, as general consumers and investors move from the centralized, manipulated, and broken fiat system to a decentralized, secure, and free currency in bitcoin.
“You think that’s a bubble? What do you think that fiat currency you carry around in your purse is? This dollar stuff, it’s just some fiat currency based on the surplus taxing authority of the U.S. Treasury of which I assert there is zero… It’s about time the world switches to real money. Either gold or bitcoin,” emphasized Byrne.