Please ensure Javascript is enabled for purposes of website accessibility

Why Is Bitcoin Better Than Paper Money?

By Motley Fool Staff - Apr 8, 2021 at 9:33AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Here's the argument on why Bitcoin could eventually gain mass adoption as a method of payment.

Could Bitcoin (BTC 1.15%) ever gain widespread adoption as a method of payment? Dan Morehead, CEO of Pantera Capital seems to think so. In this Fool Live video clip, recorded on March 18, head of our Extreme Opportunities franchise Aaron Bush asks Morehead why Bitcoin is indeed a viable currency. 

Aaron Bush: I kind of want to touch on maybe some areas where people would have questions or might have doubts. Some people say Bitcoin is like digital gold. Well, I don't think gold is interesting as an investment. Or some people say, "Bitcoin as a currency isn't as good as the dollar, why would I be interested?" People have concerns about the energy usage and things like that. To these people who have these various forms of skepticism, what would you tell them to add a different perspective to help them think past why those issues aren't a huge deal?

Dan Morehead: Yeah. I've heard those arguments for a long time and the paper currency one is the easiest one to swat away. In the U.S., we don't always think about currency very much. We have one of the least bad paper currencies. People in Venezuela, Argentina, they totally understand currencies. Even in the U.S., the dollar's lost 90% of its purchasing power since 1950. I mean, it's been debased at a very rapid rate. You used to be able to exchange $32 bills for an ounce of gold. Now, it's $1,200 for an ounce of gold. So we just keep printing more and more money.

A great example of that is the pound sterling is the oldest currency on Earth. For 850 years, it was worth one pound of sterling silver. Then they said, "Oh, it would be better if we just print money without anything to back it up." It now costs £184 to buy a pound of sterling silver. So the people that say, "Oh, paper money is great, why would I invest in Bitcoins? Paper money is no bueno, it's been going down ever since they broke the gold standard or the silver peg." Paper money has been terrible. Bitcoin has been appreciating at a rapid rate. If you take a look at U.S. dollar on a trade-related basis, since the pandemic began, it's crashing because they're printing so many of them that the value is going down at a rapid rate. Again, people say gold hasn't been a great investment. Well, in my lifetime, you could exchange U.S. dollars at $32 per ounce, and so gold has been a great investment, dollar has been terrible. Another example is the silver-colored money that used to exist, used to be made out of silver. Again, in my lifetime, quarters, dimes were made out of silver, now they're made out of cheap metals. Pennies used to be made out of copper, and now they're worth more than one cent just to melt the copper. The government's made it a felony to melt pennies. There is no intrinsic value in paper money, it's being debased all the time. Crypto, honesty, it can be very volatile. It's going to go up, it's going to go down, but 10 years from now, I think crypto is going to be worth way more than paper money.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bitcoin Stock Quote
$30,083.27 (1.15%) $341.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.