Bitcoin Cannot Replace Fiat Money: Former Finance Minister of Greece

Divya  |  Jun 29, 2021

The former minister of finance of Greece, Yanis Varoufakis, argued that Bitcoin cannot and should not displace fiat money while emphasizing that countries should adopt its underlying technology -- blockchain. 

Bitcoin Cannot Displace Fiat Money

In an interview with news publication Greek Reporter, Varoufakis, a well-known BTC critic, cited the largest cryptocurrency’s limited supply as a major drawback. He asserted that Bitcoin and other currencies of its ilk lacked the mechanism to combat crises such as the covid-19 pandemic. He specifically attacked BTC’s limited supply -- a feature hailed by the primary crypto’s advocates -- as the biggest deterrent that prevents its widespread adoption. He told the paper that the world would be in a dire situation if Bitcoin replaced fiat money because there was no way of increasing its supply.

While Varoufakis is deeply concerned by BTC’s limited supply, the feature has drawn praise from several prominent investors. Paul Tudor Jones III, Stan Druckenmiller, and Bill Miller have all pointed at this quality as the main reason behind their sizeable purchases of the flagship cryptocurrency.

Even so, Varoufakis feels that the digital asset will never attain the status of a currency because “bitcoiners celebrate bitcoin because it’s not state money.”

Blockchain Holds Potential and Bitcoin Breeds Feudalism

Like most Bitcoin detractors, Varoufakis is a fan of blockchain technology, which powers Bitcoin and most cryptocurrencies. Even countries like China, which have strict regulations against crypto trading, are experimenting with blockchain to design a new financial ecosystem that supports state-authorized digital currencies.

Speaking on the benefits of blockchain, Varoufakis noted, “When I first looked at the blockchain code, I thought: My God this is absolutely brilliant. A decentralized ledger that allows a complete record and full transparency while preserving anonymity in transactions. It is a piece of brilliance.” 
Furthermore, Varoufakis pointed that almost ten years ago he had authored an article that explained why blockchain  “is a fantastic solution to the problem we have not yet discovered. But it is not the solution to the problem of money.”
The former minister also argued against Bitcoin proponents who suggest that cryptocurrencies would democratize the financial system. Varoufakis opined that Bitcoin can create a feudal system “given its fixed supply and given the fact that there is no democratic mechanism to determine who gets and how many Bitcoins.”

Related News