Bitcoin is “Even More” of a Hedge than Gold, says St. Louis Federal Reserve VP

  • Bitcoin could be a “substitute for gold, silver and other precious metals” in wealth portfolios – David Andolfatto

In an interview, St. Louis Federal Reserve Senior Vice President and director of research, David Andolfatto talked about how Bitcoin is not a very good monetary instrument because of its fixed money supply model.

To be a good monetary instrument, he said, the asset or currency needs to be stable but Bitcoin is very


There needs to be kind of an

“elastic currency something that grows and contracts with the demand,”

he said.

However, not just Bitcoin, gold is also very volatile, as such used for primarily as a store of value and as an investment as a hedge.

Although Bitcoin might not compete with the dollar, Andolfatto said Bitcoin competes with gold as a hedge, “even more so because Bitcoin is much more fungible” and he could see it as a “go-to” asset.

He further reiterated, referencing to his blog post on Bitcoin, that it could serve as a safe asset in the sense that, in an economic crisis people would fly to the relative safety of an asset like Bitcoin, that's kind of free of government interference.”

And this is the reason he “definitely” sees a role for Bitcoin in wealth portfolios as a

“substitute for gold, silver and other precious metals.”

Back in 2014, he told Business Insider that Bitcoin’s “existence as a threat (to central banks) is very good” that will discipline the Fed and other central banks to run responsible policies or people would switch to something else.

As for the popular running narrative of central bank digital currency, earlier this year, he said,

“I now don’t see any point at all in providing central bank money in a decentralized manner.”

In a 2015 blog post titled,

“Fedcoin: On the Desirability of a Government Cryptocurrency,”

Andolfatto argued that government-backed cryptocurrencies would actually provide greater transaction transparency.

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