Alan Greenspan, former Federal Reserve Chairman, denounced bitcoin stating that the technology is similar to 1775 Continental currency, which eventually demonstrated to be worthless by 1782.
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“I’m in the process of writing a book on American History. All I can say to you is that bitcoin looks like the history of fiat money in the United States and elsewhere, going all the way back to 1789. If you look, for example, at how the Continental, which you remember was issued in 1775, and [worth] a couple hundred million dollars, and by 1782 it was worthless,” said Greenspan.
Unlike cryptocurrency, which utilizes blockchain technology, Continental money was a fiat currency.
This means the money is not backed by a physical commodity and a government has declared the currency to be legal tender, like the U.S. dollar today.
“Bitcoin is really a fascinating example of how human beings create value, and is not always rational…It is not a rational currency in that case,” Greenspan stated.
Bitcoin, while not physical, is still traded as a commodity and is backed by the collective computing power competing to win the token on the blockchain.
Furthermore, the supply of bitcoin is finite capped at 21 million, which was established before the first bitcoin was ever mined, unlike Continental currency or even the U.S. dollar which could be endlessly printed.
Bitcoin is a peer-to-peer, decentralized cryptocurrency and does not rely on any central banks or governments.
“Humans buy all sorts of things that aren’t worth anything,” Greenspan commented.
“People gamble in casinos when the odds are against them. It has never stopped anybody.”