In an interview with Cointelegraph, John Vaz, an economist and scientist at Monash University, says that the prospects for Bitcoin ( BTC ) and cryptocurrencies depend on how governments respond to the current economic crisis.
John Vaz: Bitcoin will be like a pack of cigarettes!
The economist used a rather interesting comparison. He believes that Bitcoin will become a commodity tailored to … cigarettes in prison. What is going on? You will read in a moment …
Vaz is not surprised that Bitcoin fell in the first days of the crisis. He emphasizes that at the beginning of the coronavirus crisis on March 12 and 13 everything was falling. Only a narrow group of assets, such as gold, which are perceived as a safe haven, did not record sharp price drops.
The economist also describes the perception of the US dollar as a safe haven as bizarre. He says that the US dollar is probably the worst-managed asset.
“The bizarre thing is that the U.S. dollar is seen as a safe haven and it’s probably the most poorly managed asset […] given some of the expenditure that’s going on in the U.S. — huge unfunded tax cuts given to corporate sector and so on, large defense spending, and now even larger spending for economic stimulus. So how will that be dealt with?”
Bitcoin time is coming!
In the context of the crisis, Vaz sees an opportunity for Bitcoin. In his opinion, the same economic principles that primarily motivated the creation of Bitcoins and cryptocurrencies will now further stimulate the development of these assets.
He claims that in some countries there will be a situation where governments want to protect their currency against devaluation and introduce capital controls. For this reason, cryptocurrency can become very attractive in many markets as a way to bypass currency controls and surveillance.
However, Vaz emphasizes that the success of Bitcoins will also depend on whether the cryptocurrency will be widely used, especially among institutions.
“Historically, money has value because people use it and believe it’s worth using. Cigarettes are money in prisons — no one thinks of it as money, but you can get someone probably beaten up, or killed, or whatever the criminals do for cigarettes. Now, it isn’t worth much more than cigarettes, but in prison, it’s probably as good as gold.”
He explains adding that cigarettes are gold in prisons. Therefore, during the crisis, BTC will gain in importance. It will start to play a new role in the economy. However, it depends on how many prisoners will take cigarettes