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21 September 2021

Debunking JPMorgan's Arguments Against El Salvador's Bitcoin Adoption

Debunking JPMorgan's Arguments Against El Salvador's Bitcoin Adoption

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The analysts also explained why they believe that Bitcoin is unlikely to unseat the dollar or even equalize it as a parallel currency in El Salvador.

JPMorgan claimed bitcoin isn't suitable to be used as a currency due to its high volatility and the fact that it "isn't backed by anything.".

On the other hand, saying that Bitcoin can't be used as money because it "isn't backed by anything" is the most fallacious argument of them all because the U.S.

"Few goods or services are priced or negotiated in bitcoin terms and bitcoin itself is priced in dollars," JPMorgan said.

"While retailers and merchants in El Salvador will over time accept and list prices in bitcoin, these prices are likely to fluctuate wildly according to the price of bitcoin in dollars.".

Merchants will actually not list prices in BTC, as this would simply be madness to do with a developing monetary good still early in its adoption cycle.

"In the best case, El Salvador's experiment would end with more transactions in bitcoin, and also Salvadorans hold bitcoin as a store of value and alternative to gold," the analysts claimed, per the report.

However, they will also use it as a medium of exchange.

Bitcoin's fixed supply of 21 million coins would create, according to JPMorgan, a deflationary system that is "unsustainable to most economies." BTC's "buying power would naturally increase over time given its limited supply and therefore the price of goods and services denominated in bitcoin terms would fall over time.

In either case, people would not cease spending money completely if they only used bitcoin, but they would indeed spend less.

In a Bitcoin standard, people would instead be incentivized to save for the future, spend less on nonessential items, and be able to make more significant investments that could last for generations.

"Also, the experiment's reliance on payments network Strike, which is an additional layer over the Lightning Network on the bitcoin blockchain, will pose security and privacy risks that may outweigh the reduction in transaction costs," according to the report.

The bottom line is that Bitcoin, with its clear advantages over the dollar, has the ability to bring many people to adopt it and prefer it against the green bills

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Bitcoiners Are The Remnant, The Masses Don’t Matter
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