Bitcoin Isn’t Money, It Lacks the Backing of The Massive US Government: Pimco’s Tony Crescenzi
Bitcoin is a form of exchange - a bridge, and a winner in the game of digital money said the portfolio manager at Pacific.
“Bitcoin is not money. It's a form of exchange,” said Tony Crescenzi, market strategist, and portfolio manager at Pacific Investment Management Company.
Crescenzi appeared on Bloomberg to talk about his latest book on central banks and negative interest rates, a move the Federal Reserve has not taken because “it's costly to banks” and then people would move their money out of the banks, he said.
While sharing his views on the largest cryptocurrency, he said, Bitcoin is one of the three ways of exchanging money that has “no trusted source.” The other two ways are cash and coins which are physical and electronic means through a trusted third party like the Federal Reserve.
Because Bitcoin has no trusted source, “that's where it gets a little dicey because it's one thing to see volatility in a currency but it's totally another to see volatility in the exchange mechanism the way that people are paying for things,” said Crescenzi.
However, if one is investing in Bitcoin as a technology, it is “a totally different story.” “It does look like Bitcoin is the winner in this game of electronic money… digital money,” he said.
His other concern for the flagship cryptocurrency involves regulation, much like many BTC skeptics as “at some point regulation will come along.”
Bitcoin is like a Bridge
Bitcoin doesn't have the backing of the leadership of the United States, which is a concern of Crescenzi. The crypto asset “lacks” the political, economical, and military potency of the US that protects the value of money. Crescenzi, who has worked at the New York Fed said,
“(Bitcoin) doesn't have the full faith and credit of the giant and massive and potent U.S. government behind it.”
However, in the macro backdrop of money printing which has people needing a store of actual cash somewhere away from these monetary authorities, some fiat currencies will see a mass debasement, he said.
As such, people can turn to BTC but again “Bitcoin itself is fiat. And so one has to be careful about that.”
However, bitcoin being similar to gold, “one can move into it because they decide certain currencies are not worthy anymore.” But only to be moved into some other currency eventually as the digital asset is like a bridge. Crescenzi added,
“(Bitcoin) is sort of like a bridge. And so in that sense, it has a store value element like gold. And it's one of the appeals that certainly the proponents are pushing.”
While skeptical about Bitcoin, the world is definitely moving to digitization. As for the digitization of the US currency, China is the most far ahead with Europe ahead of the United States as well.
The timeline of the Federal Reserve pushing for some sort of digitization of the U.S. currency looks to be “at least five years out” with the current regime. Crescenzi said,
“But the world is moving in that direction and this reserve will have to keep looking at it. And as you know they take a long time to do things.”