Today I am sharing my thoughts on Bitcoin as a candidate for Global Reserve Currency.
The recent high profile failure of Facebook to get the leaders of the U.S. government to approve it’s stable coin Libra, or Diem, highlights the challenges of any currency issued by a private corporation, trust, security of users information and resistance to corruption or the use of said currency by its creators to influence world affairs.
This made me think about who could be trusted to create a global reserve currency.
So I started from the basics; what is money, what is currency and what is a global reserve currency?
Money, Currency and Global Reserve Currency.
Money
Money is a medium of exchange, store of value and unit of account.
Currency
Currency is something that a sovereign nation legally declares is money in their country.
All currency is controlled by the government that issues it and the banks which distribute it, keep track of it and profit from it.
A country which issues a currency can use it’s control over that currency to influence or control it’s citizens.
Global Reserve Currency
The Global reserve currency is the currency of a country, that the worlds richest and most powerful countries have decided will be legally considered money all over the world.
It then becomes the medium of exchange, and unit of account for all international trade. This also means it becomes an international store of value.
This last characteristic is very important as devaluation of the global reserve currency affects trade and commerce globally.
Lastly, being the reserve global currency enriches the country whose currency is the global reserve currency. The US Dollar is the current Global Reserve Currency.
This brings us to our question about Bitcoin being a global reserve currency.
Bitcoin
Bitcoin is a medium of exchange, store of value and unit of account.
Therefore, Bitcoin is performing the functions of money.
Bitcoin is used all over the world as a medium of exchange, store of value and unit of account for international trade. Therefore Bitcoin is functioning as a global currency.
Bitcoin is the most secure money.
Bitcoin is a cryptocurrency issued on a blockchain, which is decentralized, distributed, recorded on a cryptographically locked ledger, which is trustless and verifiable.
Bitcoin cannot be controlled or manipulated by the usual means used on a currency of a sovereign nation by any country.
Bitcoin as the reserve global currency.
I submit to you this thesis for examination and critique:
Bitcoin can fulfill the role of a Global Reserve Currency by providing an internationally accepted money, which could be used for international trade, without the control and manipulation of any other country’s currency.
I think Bitcoin is a good candidate for Global Reserve Currency, what do you think?
@shortsegments
Penned by my hand, February 22th, 2022.
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Not a chance.
Bitcoin has no money equilibrium. Hence it cannot meet free market demands. This is a point that people overlook. There is no flexibility. There could also be the question of liquidity if enough Bitcoin gets swallowed up by the major institutions. Bitcoin could possibly end up in the hands of the central banks since it is a capped supply.
Fixed money always ends up in tyranny and, in this case, would also collapse the entire economic and financial world.
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I see...
Valid point.
Even if people are using satoshi?
Do you think a decentralized stable coin would be a better candidate like Dai or USDC coin ?
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I would disagree the flexibility comes from it’s ability to be divisible to as it’s purchasing power increases and we need more granular units it can provide that while the second force would be interest rates, by offering an interest rate you can pull stock out of supply to be used as bonds set the global use of access to currency
One thing about BTC is ,is a currency being controlled by nobody. Nobody control BTC,is a currency that's govern by nobody.
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Exactly.
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Thank you
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I don't think so, maybe one of the other cryptocurrencies other than Bitcoin.
I must admit I am concerned about the capped supply.
Do you think one of the decentralized stable coins like USDC would be better?
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I think bitcoin has the aspects technically to be a global reserve currency it jusy doesn’t have the political will yet, that comes with time! As more people come on board and benefit it slowly filters up to these institutions and you either get on board or become irrelevant
It may sound overly bullish but what’s the alternative? What is giving bitcoin any real competition?
That sounds very bullish. But you may be right.
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At this point nothing.
It has first product advantage both in name recognition and anti fragility. It’s faithful to the cryptographic principles which maintain security and its appreciation and the ability to divide it into Satoshi should address liquidity concerns. Add the current development pace of the lightening network with both satellite capabilities and cellphone transactions, along with Elon Musks work and you have a formula for worldwide availability.
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I don't think BTC can be the global reserve currency. The deflationary aspects are not good to spur economic activity and it would cause people to save rather than spend. While this is nice, it means not much will thrive in the economy.
I do think BTC can do well as collateral for the debt we have in society though as a store of wealth.
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I thinkBitcoins deflationary economics are a concern. I think the use of Bitcoin in video games like Litenight and as the exclusive currency in Communities which are part of the Bitcoin Beach Experiment will teach us much about Bitcoins capabilities in this regard.
I agree that Bitcoin has outstanding characteristics. But a stable coin might be better.
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