Despite Bitcoin's stellar performance in 2020, skepticism persists among traditional finance figures. In a recent video, Steve Forbes, chairman and editor-in-chief of Forbes Media, declared that Bitcoin is 'not yet' the new gold and criticized its 21 million supply cap.
Bitcoin's Volatility Problem
Forbes acknowledged that Bitcoin has had a remarkable rally this year, driven largely by fears of central bank money printing. However, he emphasized that the cryptocurrency's value swings are too extreme. 'Bitcoin only works best when it has a stable value,' he stated, adding that its price can be 'steak one day, dog food the next, and fillet the day after that.' This volatility, he argued, makes it unreliable as a medium of exchange.
Forbes doubled down on his support for gold, which he called 'the best insurance against inflation' with over 4,000 years of monetary history. He took issue with Bitcoin's fixed supply cap of 21 million coins, calling it 'arbitrary' and warning that it 'will severely hinder its future usefulness.'
Gold's 'Rare but Not Too Rare' Advantage
The publishing executive contrasted Bitcoin's absolute scarcity with gold's annual supply growth of about 2%. 'That keeps gold rare but not too rare,' he explained, suggesting that a moderate increase in supply is necessary for a practical monetary asset. In his view, Bitcoin's fixed cap ultimately limits its ability to function as a scalable currency.
Forbes' critique echoes recent remarks by Tom Jessop, president of Fidelity Digital Assets, who said Bitcoin is still too volatile to be considered a true store of value, though it may become a 'potential store of value' over time.
Industry Response
Forbes' comments have reignited the debate between Bitcoin maximalists and gold bugs. Proponents of Bitcoin point to its censorship resistance and programmability, while critics emphasize gold's physical stability and centuries of trust. Regardless of one's stance, the words of a mainstream financial heavyweight like Forbes underscore the deep-seated resistance that cryptocurrencies still face from the traditional establishment.
This article is based on Forbes' video published in December 2020.