Will Bitcoin Become the Global Reserve Currency?
Bitcoin, the world’s first decentralized currency, is now accepted as payment by thousands of retailers throughout dozens of countries across the world. As more countries prepare to accept this groundbreaking technology, it’s beginning to appear that Bitcoin has the potential to become the global reserve currency, not connected to a specific bank or country. With Bitcoin and blockchain technology, there’s a sense of interconnectivity and stability for the future of the financial world. The Bitcoin network generates new Bitcoin at a predetermined and constantly declining rate. With paper money, the government decides when to print and distribute money. With Bitcoin, miners use software to solve mathematical problems and receive Bitcoin in exchange. This creates an incentive for more people to get involved with mining while also making Bitcoin more safe and secure by broadening its network. Because Bitcoin can’t be controlled by a bank or government, and because it can be transferred easily (unlike gold), it’s an interesting choice for a new global reserve currency.
What is a Global Reserve Currency?
A global reserve currency is a currency that is held in large quantities by institutions and governments as international payment in their foreign exchange reserves. This means that this type of currency is mainly used in international investments, international transactions, and in all other areas of the global economy. Those who live in a country that issues global reserve currency are able to purchase imports and borrow across other countries’ borders far more cheaply than those in other nations. Those that use a global reserve currency do not need to exchange their currency which makes purchasing and borrowing across borders more affordable.
A global reserve currency is often considered a safe-haven currency or a hard currency. It’s a form of globally traded currency that is considered a stable store of value, meaning it can be saved and then exchanged later on while retaining its purchasing power. There are many factors that contribute to a currency being considered a hard currency, including:
The country’s fiscal and political outlook.
The long-term stability of its purchasing power.
The policy approach of the issuing central bank.
The United States dollar was considered the most dominant global reserve currency by the end of the 20th century. This allowed the U.S. government to borrow at lower costs and make purchases at a much cheaper cost than other nations. However, with the rise of Bitcoin as a popular currency across the world, it could potentially become a new form of global reserve currency.
Why Bitcoin Could Become the Global Reserve Currency
So, will Bitcoin become the global reserve currency? Let’s take a look at this possibility.
Bitcoin is estimated to become the sixth largest reserve currency by the year 2030. As the U.S. dollar has been viewed less favorably because of the recent economic downturn, China is already on the lookout for a brand new global reserve currency. Bitcoin hit another strong boost to its viability as a currency when the European Union declared that Bitcoin and other virtual currencies should be exempt from taxes such as value-add tax. Here are a few factors that make Bitcoin a viable option as the global reserve currency:
Bitcoin is tax-free and transactions are fairly inexpensive.
Cryptocurrency is easy to transfer around the world in a quick amount of time.
Since Bitcoin is a decentralized currency, banks and governments have zero ties to the currency which can be helpful during political and economic turmoil.
Banks are unable to use a person’s saved Bitcoins for their own investments so any government-related economic depression will never impact Bitcoin’s value.
Bitcoin has exciting traits that can make it a great option to become the next global reserve currency. Its internal architecture is designed to avoid financial and political manipulation which is perfect for a global reserve currency. As of now, there is a supply of new Bitcoins available about every 10 minutes before reaching the 21 million cap that are available. At predetermined periods, the amount of Bitcoin that are rewarded every 10 minutes is halved. It’s deflationary by nature. This allows Bitcoin to be more stable and lead to a monetary policy that is based on mathematics rather than on an individual or government. The economic downturn and poor performance of the U.S. stock market are both reasons that are making people consider digital currencies as a more attractive option. Bitcoin is also becoming increasingly enticing as a long-term investment over stocks.
It’s also important to consider how Bitcoin can be a huge change from the typical banking system and its security. Even though banking systems are protected, they are still vulnerable to malicious phishing and hacking attempts. Bitcoin is a cryptocurrency which means it is a monetary exchange that uses cryptography to secure virtual transactions and stop the creation of additional forms of currency like counterfeit virtual bills in traditional fiat currency. Since Bitcoin is a digital currency and its encryption method is always getting stronger, transactions are far more protected from hacking. All of these factors make Bitcoin more of a power player when it comes to a new global reserve currency.
Begin Buying Your Own Bitcoin Today
Bitcoin is the promising currency of the future, and as it is being considered as an option for a global reserve currency, now is the time to begin learning how to buy and trade your own Bitcoin. Pelicoin has ATMs located all over the Gulf South that are easy to use and accessible at any time. Visit our website to learn more about Bitcoin and other forms of cryptocurrency and see why it’s the perfect option for a new global reserve currency.