Bitcoin news: Dr Ammous has spoken to Express.co.uk about his explosive theory
The world’s leading cryptocurrency is limited to a total supply of 21million individual coins. Once “miners” have uncovered this precise number of bitcoins, the planet’s supply will be exhausted. The fixed supply explains how BTC’s value “in ten years has appreciated by about 700million percent”, Dr Ammous argued.
The prominent bitcoin economist has dealt with the subject extensively in his book, The Bitcoin Standard: The Decentralised Alternative to Central Banking.
The book plots BTC’s history from its creation by a pseudonymous programmer or group of programmers called Satoshi Nakamoto to “ten years later, and against all odds, this upstart autonomous decentralised software offers an unstoppable and globally-accessible hard money alternative to modern central banks”.
Speaking to Express.co.uk, Dr Ammous said: “Bitcoin is not the toy you want, it is the medicine you need.”
The member of the Centre on Capitalism and Society at Columbia University added: “Bitcoin is not optional. It is here to stay.
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Dr Ammous said bitcoin will become the ‘hardest money on earth’
“It kicks every other money’s ass because its supply is just completely set.”
At the time of writing the total number of bitcoins in circulation was 17,374,775, according to blockchain.com.
As the number of coins in circulation increases the cryptocurrency becomes a “harder” asset, making it a better store of value, according to Dr Ammous.
BTC has become a “monetary good” because its value is “completely determined by people buying it and selling it” rather than people producing it, Dr Ammous said.
Bitcoin is a highly volatile asset experiencing large swings in its value
The physical properties of objects are no longer important in them gaining a monetary role, he explained.
Bitcoin, Dr Ammous maintained, is the “all-conquering juggernaut of economic incentives” because as its supply incrementally increases year-on-year, its value soars – unlike traditional fiat currencies.
The reason for the meteoric rise in BTC’s price is because the supply growth rate is so low.
BTC’s supply growth rate was at roughly one percent at the time of writing, in comparison to most fiat currencies which tend to be about five percent.
Bitcoin will triumph over existing fiat currencies, Dr Ammous suggested
But despite Dr Ammous’ positive predictions, the price of bitcoin has been highly volatile over the past year, as the asset experienced huge swings in its value over short periods of time.
Treasury Committee chair Nicky Morgan has described the industry associated with bitcoin as the “wild west”.
She said: “Bitcoin exists in the wild west industry of crypto-assets.
“This unregulated industry leaves investors facing numerous risks.
Bitcoin’s price has been very volatile over the past year
“The Treasury Committee strongly believes that regulation should be introduced.”
For Dr Ammous, the sheer “economic reality” of BTC’s monetary incentives means the virtual asset will one day define global systems, as institutions inevitably cry out for a dynamic financial overhaul to suit the modern age.
He said: “Bitcoin is going to offer us a new, decentralised banking system around the world.”
The professor of economics at the Lebanese American University argued: “stores of value that are easy” such as fiat currencies will eventually become redundant and “hard money” will thrive.
Nicky Morgan says cryptocurrencies operate in a ‘wild west’ industry
He said: “Wealth will naturally end up concentrating in the hands of those holding the hardest money.
“The point is: bitcoin, in terms of its design and monetary policy, has a very unique property which is that it is the first monetary asset we’ve ever had whose supply is completely unresponsive to demand.
“What makes something worth using as money is once people put their wealth in it and start to use it as a store of value it is hard for others to simply increase the supply and bring the price down and make more if it.”