Hyperinflation is likely to hasten the demise of traditional financial institutions, dethrone the U.S. dollar as the world’s reserve currency, and accelerate the growth of crypto, leading figures in the crypto movement said at a conference in El Salvador.
Sam Bankman-Fried, the 29-year-old founder of FTX and richest person in crypto with a net worth of $26.5 billion, and Max Keiser, a journalist and leading promoter of bitcoin, spoke recently at Latin American Bitcoin & Blockchain Conference — an event featuring many of the world’s top crypto luminaries.
In his comments, Bankman-Fried said rising inflation will deliver a serious blow to the fiat currency. Meanwhile, traditional financial institutions have started down an irreversible path of becoming “obsolete" and of little use for solving “the problems of the people,” he said.
“The legacy of financial entities is so outdated, so difficult, it is incredible that we have been able to survive like this for so long,” Bankman-Friend said during the event. “I am excited to see more adoption of bitcoin, I think there is much more to explore in this regard. In the crypto ecosystem we see great demand. The years have passed and in more parts of the world they expect more adoption of bitcoin and blockchain,” he said.
Keiser, host of RT’s the Keiser report and a self-described “bitcoin maximalist” (crypto person who advocates only holding bitcoin), chimed in with more forceful commentary. He said the financial system has been engaging in “desperate maneuvers” to counter the surge in the cryptocurrency market, now worth about $3 trillion worldwide. Those measures are actually worsening inflation and hastening their demise, however, he said.
“Money printing has been a problem for a long time,” he said. “In the United States, as well as in the world, all central banks coordinate with each other to extend the hyperinflation crisis, as a measure to keep fiat money alive.”
He added: “That is why the value of bitcoin is at $50,000 or $60,000, because there is a fear of hyperinflation that is coming. When the cost of food is above 40% of a country's GDP, people end up incurring insurrection. We saw it in the Arab Spring or in the French Revolution, where people came to insurrection, in part, because of the cost of food. The whole currency is on the way to collapse, no matter what the economists say.”
Bitcoin, however, could be an equalizer. While the U.S. has historically had a strong influence over the economy of Latin America, cryptocurrency could change that scenario, he said. Uncoupling economic influence from institutions and nations like the U.S. could be appealing to many people across the world, making crypto all the more alluring.
“We are close to seeing the demonetization of the world's economies,” he said. “Nothing backs the dollar, just men with guns. The (dollar) bills represent hatred. The military has half of most of the taxes we pay in the United States.”
Bankman-Fried and Keiser’s remarks come as government officials in the U.S. warily eye the rise of crypto, and look to impose checks on the market as well as enhance regulations and investor protections. At the Bloomberg New Economy Forum earlier this month, former U.S. Secretary of State and two-time presidential candidate Hillary Clinton said the destabilizing potential of crypto is a key concern for policymakers.
“What looks like a very interesting and exotic effort...has the potential for undermining currencies, for undermining the role of dollars as reserve currencies, for destabilizing nations…,” she said in comments tweeted by New York Times media columnist Ben Smith.
Latin America, however, has been more welcoming to cryptocurrency. El Salvador became the first country in the world to make bitcoin legal tender in June. Brazil and Paraguay are now locked in a race to be second.
The Congress of Brazil proposed a bill to that effect in September, while Paraguay unveiled its proposal in June. The bill in Paraguay proposes to regulate cryptocurrencies and allow their mining. In addition, it seeks to establish legal, financial and tax security in businesses related to virtual digital assets. Both bills reflect the legal framework first established by El Salvador.
With Brazil and Paraguay on the road to ratifying bitcoin as legal tender, Keiser and Bankman-Fried's words take on greater force.
