Ex US Treasury Secretary Lawrence Summers believes digital currencies will continue to be a part of international markets as digital gold, even if their economic impact will be partly restricted.
Summers said digital currencies represented a substitute to gold for those wanting a commodity independent and apart from the operations of authorities on Bloomberg Television’s “Wall Street Week” with David Westin at the end of a week in which Bitcoin swung back and forth.
“Gold has been a primary asset of that kind for a long time,” stated Summers to Bloomberg. “Crypto has a chance of becoming an agreed form that people who are looking for safety hold wealth in. My guess is that crypto is here to stay, and probably here to stay as a kind of digital gold.”
Summers stated that if digital currencies reached a third of the overall value of gold, it will be a significant acceleration from current prices, implying that “virtual currency would be part of the economy for a while.
The crypto world also compares Bitcoin to gold, with different predictions as to whether and when their overall market values would be equal to each other.
“It’s not out of the question that Bitcoin will reach gold parity in the next five years”, Yassine Elmandjra, a cryptocurrency expert at Cathie Wood’s Ark Investment Management LLC, stated previously in the month if gold were believed to have a market value of about $10 trillion. With Bitcoin’s market capitalization hovering near $700 billion, this may result in a 14-fold or greater price increase.
Role in the Economy
Summers, on the other hand, believes that digital currencies have little effect on the general economy and are unlikely to soon replace cash as a means of payment.
Summers is a member of Square Inc.’s management board. Revenues in the first quarter increased by more than 3 times, according to the firm, thanks to a surge in Bitcoin payments via the corporation’s Cash App.
Summers’ remarks were repeated by Nobel Laureate Paul Krugman, who questioned digital currency’s usefulness as a means of trade or a source of steady buying power, but suggested that certain types of it might survive as a gold substitute.
“Are cryptocurrencies headed for a crash sometime soon? Not necessarily,” Krugman stated in the New York Times. “One fact that gives even crypto skeptics like me pause is the durability of gold as a highly valued asset.”