Trump Blasts Bitcoin as ‘Scam’ That Threatens Dollar’s Role as Reserve Currency

Former President Donald Trump addresses the Conservative Political Action Conference held in the Hyatt Regency in Orlando, Fla., on Feb. 28, 2021. Joe Raedle/Getty Images

Former President Donald Trump fixed his crosshairs on bitcoin on June 7, calling the blockchain-based cryptocurrency a “scam” that threatens the greenback’s dominance as the world’s chief reserve currency.

“Bitcoin, it just seems like a scam,” Trump told Fox Business’s Stuart Varney.

“I don’t like it because it’s another currency competing against the dollar. ... I want the dollar to be the currency of the world. That’s what I’ve always said.”

Trump in 2019 directed similarly harsh criticism against bitcoin and other cryptocurrencies, writing on Twitter that he was “not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.”

The logo of the Bitcoin digital currency in a shop in Marseille, France, on Feb. 7, 2021. Eric Gaillard/Reuters

The idea that bitcoin’s utility as a currency is limited has been echoed by “The Black Swan” author and former derivatives trader Nassim Nicholas Taleb, who told CNBC in an April interview that he was “fooled” into thinking it could be a viable alternative to central bank-issued fiat currency before coming to the conclusion that its volatility makes it “just speculation,” a “game,” and a “Ponzi scheme” run out in the open.

“I bought into it ... wanting to have an alternative to the fiat currency issued by central banks—a currency without a government,” Taleb said. “I realized it was not a currency without a government. It was just pure speculation. It’s just like a game.

“You don’t replace the currency with something that’s so volatile that you can’t really commit to a transaction in it.

“Something that moves 5 percent a day, 20 percent in a month—up or down—cannot be a currency. It’s something else.”

After a dizzying bull run that took off in December 2020 and saw bitcoin’s price surge to around $64,000 in April, the cryptocurrency has seen a sharp selloff and, at the time of reporting, was trading at around $36,000.

Bitcoin-U.S. dollar chart, from Oct. 2020 to the present. Courtesy of Tradingview

Taleb also said bitcoin, which has sometimes been described as “digital gold,” is not a good hedge against inflation.

“There’s no connection between inflation and bitcoin,” Taleb told CNBC. “If you want to hedge against inflation, buy a piece of land. Grow, I don’t know, olives on it. You’ll have olive oil. If the price collapses, you’ll have something.”

Investment managers have warned that a key risk to cryptocurrencies as a viable asset class is that the government could simply ban them.

Ray Dalio, billionaire investor and founder of Bridgewater Associates, told Yahoo Finance in a March interview that there’s “a good probability” that governments around the world will ban bitcoin and other cryptocurrencies, much as the U.S. government once banned private holdings of gold.

“Every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing, because things can get out of control. They outlawed gold, that’s why also outlawing bitcoin is a good probability,” Dalio said.

Some have argued that the crypto-ban ship has sailed, however, with Securities and Exchange Commission commissioner Hester Peirce told Barron’s in April, “I think we were past that point very early on because you’d have to shut down the internet.”