We all knew the economy is going down 👇, and the best thing is you do not have a choice but to go down with it. What if you have an option to choose not to?
The financial world is entering an era of digital transformation, driven by advancements in software, data analytics, and artificial intelligence, as well as the growing adoption of mobile apps and Internet-connected devices. This digital revolution is transforming almost all sectors — including finance. Non-bank FinTech companies are gaining market share by providing innovative digital financial services that respond to the needs of customers in a faster and more cost-effective way than traditional banks. Financial services companies must adapt their business models to compete in this new environment or risk becoming obsolete. Understanding how blockchain is changing finance and accelerating the fourth industrial revolution will give you a clearer picture of how investments might perform in the future. In this article, we explain why Bitcoin has a chance to become the new global reserve currency if you are still worried about the bear market.
Why Bitcoin May Become the Global Reserve Currency
For multiple reasons, Bitcoin has a chance to become the new global reserve currency.
1️⃣ First, the demand for Bitcoin is growing in large emerging markets such as Africa and Asia.
2️⃣ Second, the supply of Bitcoin will soon be capped at 21 million, which will drive the price up.
3️⃣ Third, Bitcoin is becoming an asset class in its own right, with investor demand increasing as the price of Bitcoin rises.
4️⃣ Fourth, governments are showing increased interest in cryptocurrencies as a source of capital. Some governments, such as Venezuela, Turkey, and Russia, are turning to Bitcoin as a way to circumvent Western economic sanctions.
5️⃣ Finally, the increasing number of institutional investors trading in Bitcoin is likely to drive demand higher. To meet this growing demand, more and more financial institutions are offering cryptocurrency-related products, such as exchange-traded funds (ETFs) and Bitcoin futures. More than 80% of Fidelity’s wealth-management clients now want to know more about cryptocurrencies. This growing institutional demand will drive the price of Bitcoin up even further and increase the legitimacy of cryptocurrencies as an asset class.
Pros of Bitcoin Becoming a Global Currency
If Bitcoin becomes the new global standard for currency, it will have many advantages over traditional currencies.
1️⃣ First, it would be much harder for central banks to manipulate the value of Bitcoin compared to fiat currencies.
2️⃣ Second, Bitcoin transactions are cheaper, faster, and more reliable than legacy payment systems.
3️⃣ Third, unlike fiat money, Bitcoin cannot be mismanaged by central bankers, misappropriated by government officials, or become unbacked by gold reserves.
4️⃣ Fourth, Bitcoin is more transparent than fiat currencies because the blockchain ledger shows where every coin came from and where it went.
5️⃣ Fifth, Bitcoin is more secure than the current payment infrastructure because it is decentralized rather than centralized like the credit card system.
6️⃣ Sixth, Bitcoin is based on distributed systems that are less prone to cyberattacks. Seventh, the supply of Bitcoin is transparent, predictable, and finite.
Cons of Bitcoin Becoming a Global Currency
If Bitcoin does become the new global reserve currency, there will be many drawbacks for the global economy.
1️⃣ First, a Bitcoin standard would benefit a few large Bitcoin holders but hurt the rest of the world.
2️⃣ Second, a Bitcoin standard would create a single point of failure. If the Bitcoin blockchain were hacked or destroyed, the entire system would be brought down.
3️⃣ Third, the current payment infrastructure is more efficient than blockchain technology, which would be rendered obsolete by a Bitcoin standard.
4️⃣ Fourth, a Bitcoin standard would give a few large mining companies excessive power over the entire world economy.
5️⃣ Fifth, a Bitcoin standard would be deflationary, which would harm consumers and the global economy by reducing spending demand.
6️⃣ Sixth, a Bitcoin standard would cause rising trade wars between nations that hold large stocks of fiat currency and those that hold stocks of Bitcoin.
Bitcoin as a Native Currency for Electronic Commerce
Bitcoin has the potential to become the new global reserve currency for electronic commerce. The current payment infrastructure is expensive and inefficient. The infrastructure requires banks to verify the authenticity of goods, maintain the authenticity of paper receipts and provide insurance for shipments. If a Bitcoin standard were implemented, companies would no longer need to provide these services. Consumers would be able to verify the authenticity of goods and services, manage their receipts, and provide their own insurance for shipments simply by scanning a QR code with their smartphones. Bitcoin will make all forms of electronic commerce cheaper and easier to manage. This will open up new avenues for small businesses to participate in global trade and will reduce the costs of outsourcing for multinational enterprises.
As financial institutions transform their operations to meet the needs of the digital age, they are increasingly adopting blockchain technology. Blockchain offers a cheaper, faster, and more secure way to process financial transactions, store data, verify identities and make payments. If the current trend holds, Bitcoin has a chance to become the new global reserve currency, with all the advantages and drawbacks that come with this status.