Crypto Has Fundamental Flaw, Bitcoin’s Fixed Supply Could Cause Its Value to Collapse – Featured Bitcoin News


A chief economist at UBS, Switzerland’s largest bank, says cryptocurrency has a fundamental flaw. Bitcoin’s fixed supply could cause its value and purchasing power to collapse and make it unattractive to use as a currency, he claims.

A UBS chief economist says Bitcoin’s fixed offer is a “fundamental flaw”.

Paul Donovan, chief economist at UBS Global Wealth Management, explained last week why people don’t want to use Bitcoin as a currency. UBS is the largest bank in Switzerland.

“The debate about Bitcoin and other cryptographies is usually very passionate. Crypto supporters say economists are just dinosaurs, and economists say crypto supporters are just selling a bubble. “He also pointed out that Bitcoin and other cryptocurrencies were price volatile.

“If we look at the subject objectively, I think that an important question is whether Bitcoin and other crypto currencies could be,” the UBS chief economist continued, emphasizing: “And I don’t think they can.”

He explained: “One of the main reasons for this is that a currency has to be a stable store of value. With a correct currency, you have real peace of mind that the shopping cart you can buy today will be the same as the shopping cart you can buy tomorrow. “

However, he claimed, “With Bitcoin and other cryptographies, you don’t have that certainty.” The chief economist at UBS stated:

It all stems from a pretty fundamental flaw in crypto. To achieve stable purchasing power, a store of value, a balance between supply and demand.

“So if the demand for appropriate currency falls, the central bank can reduce the supply, keep the balance and thus maintain purchasing power,” said the UBS chief economist. However, he made no distinction between cryptocurrencies with a fixed supply like Bitcoin and other coins without a fixed supply, including stable coins.

Donovan continued:

However, if the demand for crypto falls, and it naturally does, then supply cannot fall to maintain the balance. The value and the purchasing power collapse immediately.

“It could collapse for a short period of time or it could collapse for a long period of time. But people are unlikely to want to use something as currency if they have absolutely no certainty about what to buy with it tomorrow, ”he concluded.

On the other hand, many financial strategists have said that Bitcoin’s volatility decreases as it becomes more widely accepted. Fidelity recently pointed out that BTC’s volatility was down about 50% from a few years ago. In July, BTC’s volatility hit a three-year low. Billionaire investor Bill Miller said the higher the price, the riskier Bitcoin becomes.

UBS recently released guidelines on Bitcoin investing. “We would not rule out further price increases,” warned the bank: “We are also aware of the real risk that someone could lose their entire investment. Investors in cryptocurrencies must therefore limit the size of their investments to an amount that they can afford to lose. “

What do you think of the UBS economist’s opinion on Bitcoin? Let us know in the comments below.

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