Americans Still Don’t Understand How Bitcoin Works

Despite the rise of cryptocurrencies such as Bitcoin, Americans still don’t understand how they work. As an example, they don’t understand that they’re competing not with cash, but with Treasury bonds and gold bars.

American’s lack of understanding of cryptocurrency

Despite the soaring popularity of cryptocurrencies, a recent survey reveals that nearly half of Americans still don’t have a clear understanding of what these digital assets are and why they’re used. This lack of understanding is the second-largest barrier to mainstream crypto adoption, behind the lack of trust and security. However, more than half of Americans say that if they knew more about cryptocurrencies, they would be more likely to use them.

The survey was conducted by peer-to-peer Bitcoin marketplace Paxful. It surveyed a sample of 1,700 American adults. One-in-five said they had personally used cryptocurrencies, and a third said they wanted to become a part of a crypto Bitcoin community. The survey was based on online interviews conducted between August 2020 and August 2021. It was weighted by age, region, education, and race.

It’s competing not with cash, but with Treasury bonds and gold bars

Several federal policymakers have pushed for capital controls on Bitcoin in an effort to prevent the digital currency from competing with the nation’s most liquid and reliable reserve asset, the Treasury bond. The reason for this is that if a government restricts the use of the virtual currency, then it would signal to the market that the United States isn’t competitive. If it is, it would undermine America’s borrowing capacity. This would be bad news for the economy, but good news for investors.

The same goes for gold, which has a variety of use cases. In addition to being a reliable store of value, gold is an effective strategic component of a portfolio. The London Bullion Market Association runs a program to ensure the integrity of gold bars. A blockchain ledger could also be used to ensure that the bar is pure and not tampered with.

It can improve the prosperity of hourly wage earners and retirees on fixed incomes

Getting your hands on the cryptographic gold coin is not for the faint of heart. Bitcoin may be the sexiest financial product on the planet, but it is still a far cry from a national currency. As a matter of fact, the Federal Reserve is resolutely against such a fiat currency. Despite all the rhetoric, the Fed has no plans to abandon its monetary policy of choice. That is a good thing for America’s economy.

For starters, the biggest problem is figuring out how to manage the growing swell of fiat currency in the first place. Besides, a monetary policy that is purely a function of inflation could have dire consequences. Fortunately, a bit of creative thinking could help avoid a calamity on the home front.

It can be the next great driver of American growth

Among all the other things, cryptocurrencies such as Bitcoin have important implications for global finance. The world is moving into a new monetary order that will be very different from the 20th century order. The dollar’s role as the world’s official reserve currency will be eliminated, and Americans will have to learn how to use another form of currency to finance their everyday transactions. This will be a huge strategic opportunity for the United States.

Inflation is the inescapable challenge that America will face in the future. The Fed’s printing press is fueling an explosion of debt, and the federal government will have to spend more in order to make the debt payments. In order to finance the spending, someone will have to buy Treasury bonds. Without major entitlement reform, this is unlikely to happen.