Bitcoin Is 'Store of Value' Though Not Yet 'Medium of Exchange,' Dallas Fed's Kaplan Says

The U.S. economy is "not out of the woods yet," said Dallas Fed President Robert Kaplan.

AccessTimeIconApr 16, 2021 at 6:40 p.m. UTC
Updated Sep 14, 2021 at 12:42 p.m. UTC
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Federal Reserve Bank of Dallas President Robert Kaplan said bitcoin is a "store of value" that's not yet ready for wider adoption as a medium of exchange.

Kaplan, a former Goldman Sachs executive and Harvard Business School professor, made the remarks Friday at a bitcoin conference hosted by Texas A&M University's Mays Business School. He served on the Federal Reserve's monetary-policy committee, the Federal Open Market Committee, before rotating off at the end of 2020.

"Right now it's clear it's a store of value," Kaplan said of the largest cryptocurrency. "It obviously moves a lot in value, which could keep it from spreading too far as a medium of exchange and wide adoption, but that can change."

Lately, that movement has been up, in dollar terms. The price of bitcoin (BTC) has increased eightfold over the past year, to about $61,400 as of press time, for a market capitalization of about $1.1 trillion.

A growing number of big investors, including legendary hedge fund managers Paul Tudor Jones and Stanley Druckenmiller, have said bitcoin might serve as an effective hedge against inflation in the face of trillions of dollars of coronavirus-related monetary stimulus by the Federal Reserve.

An alternative perspective would be that the U.S. dollar has lost nearly 90% of its value, when expressed in bitcoin terms.

  • "This is an innovation, and it's not just bitcoin but the technology like blockchain and other technologies that go along with it," Kaplan.
  • The U.S. economy is "not out of the woods yet," he said, adding that signs of inflation this year are due to supply and demand imbalances.
  • "The question is, will this be a one-time price adjustment or is it going to be persistent?" Kaplan said. "The jury is still out on that. Structural forces such as tech-enabled disruptions and aging limit pricing power."
  • When asked about China's plans to launch a central bank digital currency (CBDC), Kaplan said that "the China experiment is tied to the value of the underlying currency. In some cases, you could argue it's a way to monitor flows."
  • A "digital dollar will likely be tied to the value of the underlying currency," Kaplan said. "It's a different subject than bitcoin, a store of value that is not tied to an underlying currency."


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