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Can Cryptocurrencies and Traditional Banking Coexist?

By Motley Fool Staff - Mar 29, 2021 at 8:22AM

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Bitcoin doesn't need to replace traditional banking to be successful.

Bitcoin (BTC 1.53%) is often referred to as the "money of the future," but that doesn't necessarily mean that it's going to be the only money used decades from now. In this Fool Live clip, recorded on March 18, Gemini cryptocurrency exchange co-founder Cameron Winklevoss explains to The Motley Fool's Chief Growth Officer Anand Chokkavelu why he thinks cryptocurrencies and the traditional banking system could coexist. 

Anand Chokkavelu: Definitely correct me if I'm wrong here. But one thing that strikes me about your world view, and it's somewhat rare in the cryptocurrency space, is how you seem to focus on how cryptocurrency can work collaboratively with the traditional financial system, it's and not or. Can you share some thoughts on that?

Cameron Winklevoss: Yeah, absolutely. I think Bitcoin and crypto forces the financial system to become better and up their game at a minimum. I think competition is always a good thing, or understanding there's new ways to do things. But Bitcoin is really not gunning for the dollar. It hasn't proven to be a great medium of exchange, currently. It's really a store of value. The first Bitcoin transaction involved two pizzas, and they were Papa John's (NASDAQ: PZZA) pizzas and I think they were sold in 2010 or something for 10,000 Bitcoin. They must have been really good slices of pizza because today that value would be, I think, half a billion dollars. That's really a great example of why you don't want to spend your Bitcoin, just like you don't want to spend your gold. If you were holding gold in the 1970s, you'd be up something like 26, 27 times. If you held US dollars, you'd have lost something like 96% or 97% of the purchasing power of those dollars. Dollars, the inflation, they lose value and purchasing power and as a result, people want to spend them and it's a much better currency than something like Bitcoin. There are things called stable coins. Gemini actually issues one, where you can get a token that represents a dollar and use that in decentralized finance and send it through the internet or whatever. But Bitcoin really hasn't proven to be a great currency at present, and it may never be, just like gold is really not used as a currency today. It is sort of commodity money and Bitcoin is much more near money than gold. But I think that if it's a store of value, that's perfectly fine and at a $1 trillion market cap, which it recently crossed, it still has about a 10X to go before it overtakes gold, and we think that Bitcoin's really first step is gunning for gold and vying for that value mantle.

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