Bitcoin and other cryptocurrencies seem to be increasingly dominating the world. Will the Dollar be replaced by Bitcoin? The answer could be yes or no, but probably no.
Launching India Today, Saturday (9/25/2021) technically, anything can qualify as money as long as the recipient and sender agree, essentially the same as bartering that has been done since ancient times. People will get rice instead of flour or salt instead of sugar.
But not all of them are available or can be grown in equal quantities. This makes certain items more valuable than others. For example, 1 liter of gasoline is more valuable than 1 liter of water.
Paper currency has helped achieve some stability and has an inherent value in every good and service. There is a generation who believes that paper currency can also lose its value or perish like any other currency over a period of time.
Cryptocurrencies emerged as a way to decentralize money after the 2008 financial crisis. There is a group of people who believe that as more people will start buying these coins, their value will increase, and they can emerge as a substitute for paper currency.
Meanwhile, the world's central banks are currently reviewing the Central Bank Digital Currency (CBDC). This CBDC is a new initiative that is growing in the world. Central Banks around the world can get into digital money.
Indeed, the CBDC has not yet been part of the blueprint for the working group on the development of the money market and payment system. This is because CBDC concerns technology platforms and so on.
While that possibility cannot be ruled out, there are many challenges that might stop Bitcoin and other cryptocurrencies from replacing the Dollar.
Another factor is that there are several cryptocurrencies in the right market, but few of them including Bitcoin and Ethereum can be taken seriously. They are like Dogecoin, Shiba Inu, and coins from other memes. So, at some point, one has to decide which cryptocurrencies are acceptable and allowed to exist in the economic system.
Most investors also don't see crypto as a payment method. They use it to invest money faster than the stock market or mutual funds.
In your opinion, could crypto replace the Dollar in the future? Is it possible to become one global currency? We have also discussed this possibility and you can read about it below.