Investor Bill Miller, whose flagship fund beat the SP 500 in terms of profitability for the second year in a row, said Bitcoin could well replace cash.
Miller also noted the fact that real inflation rates in the markets were underreported and mentioned the difficult relationship of the world famous investor Warren Buffett with the first cryptocurrency.
Recall that the SP 500 index includes five hundred companies with the highest market capitalization among those traded on the US stock exchanges. It is compiled by experts from Standard Poor’s, and is also owned by this company. In general, the index has been in existence for over 63 years.
Cryptocurrency is conquering the world
According to Miller, Bitcoin has many advantages over gold and other traditional assets. Unfortunately, Buffett does not notice or simply does not want to notice this fact. Here is a quote from an investor in which he shared his attitude to what is happening. The replica is provided by Coindesk.
Warren Buffett called Bitcoin rat poison. He may well be right. Bitcoin may be rat poison, but in this case, the rat is cash.
Thus, he means that cryptocurrency will create problems for ordinary money. Still, it has significantly more advantages in the form of ease of transfers, independence from governments and the inability to create an additional million bitcoins at the request of some rich man. Against the backdrop of a pandemic with the national currencies of various states, there is just a large-scale emission, that is, the release of a new money supply. According to economists, in the future this will negatively affect what is happening in the countries.
Recall that a couple of years ago, Buffett really compared Bitcoin to rat poison. At one time, the creator of the Tron project, Justin Sun, tried to convince him, but the attempt did not end with anything.
And now, after a while, Buffett’s words played a cruel joke on him. To be more precise, not with him, but with his company, which Bitcoin recently surpassed in terms of capitalization in the rating of world assets. Accordingly, the global population values BTC more than Buffett’s organization.
Another aspect that Miller touched upon is the growing inflation in the United States against the backdrop of emergency measures to support the economy under quarantine conditions. The expert continues.
Saving rates are unusually high, and as the economy became more “normal” in the second half of last year, it is likely that consumption will accelerate, and with it the velocity of money will increase. High liquidity and an increase in the velocity of money circulation can quickly lead to an increase in the rate of inflation.
In such circumstances, large companies, which are also called institutional investors, will actively seek «safe assets» that are not subject to inflation. Actually, they were tightly engaged in this in the second half of 2020. So there is every reason to believe that in 2021 Bitcoin will interest them even more, and the value of the cryptocurrency will begin to grow even faster.
We believe that Bitcoin will not be able to replace cash and become a payment platform for conducting daily transactions, since the cryptocurrency network is not trivially designed for this. It can handle about seven transfers per second, and when the demand for transactions grows significantly, the size of the commission increases to incredible rates. Accordingly, even if everyone knows about cryptocurrency, he is unlikely to be able to use it against the background of mass popularity – still, hardly anyone wants to pay a conditional $ 50 commission for buying goods in a supermarket for $ 20.
However, Bitcoin is capable of opening people’s eyes to what is happening in the financial sector, which it is doing now. Cryptocurrency is not influenced by government actions and relies solely on its own code. In addition, the blockchain makes the system transparent, which is so lacking in the current world. This means that BTC can be called a free and independent asset. After meeting him, people are unlikely to want to return to ordinary money.
