Former US Treasury Secretary says Crypto is “Here to Stay” as a “Kind of Digital Gold”
According to Lawrence Summers, “Crypto has a chance of becoming an agreed form that people who are looking for safety hold wealth in.”
Former US Treasury Secretary Lawrence Summers is a believer in crypto, and yet again, he came in its support as he said that it could be a feature of the global market like “digital gold” even if their importance in economies will be limited.
Cryptocurrencies offer an alternative to gold for those seeking an asset “separate and apart from the day-to-day workings of governments,” said Summers in an interview with Bloomberg.
Summers is on the board of directors of Square Inc.; the payments company revealed in its Q1 2021 results that its sales more than tripled, driven by skyrocketing Bitcoin purchases through its Cash App.
“Gold has been a primary asset of that kind for a long time,” said Summers, who believes crypto “is here to stay” and could do that “as a kind of digital gold.”
“Crypto has a chance of becoming an agreed form that people who are looking for safety hold wealth in.”
If the crypto captures even a third of the total value of gold which has a market cap of around $10 trillion, Summers said that would be a “substantial appreciation from current levels,” and that means there’s a “good prospect that crypto will be part of the system for quite a while to come.”
With Bitcoin’s current market cap around $683 billion, achieving gold’s market cap would have its price appreciating around 14-fold or more.
Yassine Elmandjra, a crypto analyst at Cathie Wood’s Ark Investment Management, is of a similar opinion and said earlier this month that if that is to happen, “it’s not out of the question that Bitcoin will reach gold parity in the next five years.”
Summer meanwhile said that cryptocurrencies do not matter to the overall economy. According to him, they were unlikely to ever serve as the majority of payments either.
Reiterating his worry about the US economy risking overheating in the interview, Summers said the Federal Reserve should be more aware of the inflationary threat.
“I don’t think the Fed is projecting in a way that reflects the potential seriousness of the problem,” he said. “I am concerned that with everything that’s going on, the economy may be a bit charging toward a wall.”