Why Bitcoin Can Become The New Global Currency


Why Bitcoin Can Become The New Global Currency

Bitcoin is quite often seen as an outsider in the world of finance, simply because it’s not issued nor controlled by a bank or government. But there are several downsides to the traditional monetary system as well, which was clear for everyone to see during the recent Greece debacle. Will the future lie in traditional finance, or is Bitcoin the solution everyone has been waiting for?

Also read: A Cashless Society is Economic Apartheid (Without Bitcoin)

The Root Cause of The Financial Crisis

Bitcoin.com_Financial Crisis Root CauseEveryone who has not been living under a rock for the past 8 years may have heard the global economy is still stuck in a financial crisis. Even though the latest “banking crash” occurred back in 2008, the ramifications are still present this very day. The job market is facing negative or stagnant growth, fiat currencies still haven’t recovered, and there is little to no improvement in sight.

As much as the banks are to blame for that financial crisis, they are not the root cause of the problem. That problem runs much deeper, and can be traced back to roughly 45 years ago when the value of the US Dollar was decoupled from the value of gold. From that moment forward, the US Dollar – which is the global currency today – was effectively backed by nothing but promises.

The result of that decision brought on instability of floating currencies, and a lengthy period of stagnation in the 1970s. The “Nixon Shock,” as this decoupling decision is called, also caused a lot of speculation against the US Dollar, and even forcing the Japanese central bank to bail out the currency within the first three days after this decision.

Fast forward to today, and the sole privilege of creating money out of thin air belongs to central banks and governments, devaluing the existing monetary supply further every time this happens. While doing so is usually an attempt to restore international competitiveness, it can also cause hyperinflation.

Furthermore, making debts has become incredibly easy, and every country’s debt ceiling has been growing year over year. The recent Greece debacle once again illustrated how things are flawed in the current economic model. In the end, the European Union put together a financial care package, drawing funds from other countries to help out the struggling Greeks. However, that solution didn’t solve the root cause of the problem, as it only delayed the inevitable.

Abolishing The Monopoly on Money Once and For All

The most straightforward – and utterly difficult – solution would be to come up with a way to enable free competition of non-state currencies. Bitcoin would be a prime candidate for this concept, as this borderless currency can be used everywhere in the world in the same manner, as well as be exchanged for all major local currencies.

Granted, Bitcoin is not backed by gold either, but unlike traditional currency, there is a maximum limit of value to be “created out of thin air”. Once the supply cap of 21 million Bitcoin has been reached – at some point in 2140 – no more coins will be generated. According to most investors, Bitcoin is a superior investment vehicle, as scarcity usually leads to an increase in value.

But there’s more to Bitcoin than just being part of an investor’s portfolio, mind you. Sending funds around the world takes a handful of seconds, making it a perfect solution for the Digital Age our society is slowly transitioning to. Also, Bitcoin is essentially a free market, based on supply and demand, without mingling by governments, authorities, banks, or any other overarching institute.

Does Bitcoin Hold The Answer To Our Problems?

Bitcoin solutionsThe answer to that question is both yes and no at the same time. According to Bitcoin enthusiasts, everyone should convert [part of] their savings to Bitcoin right now, while the price per BTC is still fairly low. Financial experts, on the other hand, will gladly tell consumers to stay away from Bitcoin for as long as possible.

Both parties are right in their own way, as the final decision rests on the shoulders of the individual. No one can tell you what to do with your money, or how to manage it. Unfortunately, banks are more than happy to “manage” the wealth in your bank account, although customers won’t notice any changes. In the Bitcoin world, everything is far more transparent, which can be scary for some users.

Diversifying the risk of another financial crisis is always a good idea. Some people will choose to invest in precious metals, such as gold or silver. Others will flock to Bitcoin and potentially reap the rewards. Yet others will stick to the system they know and hope for the best. Time will tell who is right, but a major shakeup in the financial world as we know it is inevitable.

What are your thoughts on the monopoly by central banks and governments to control the monetary supply? Should the people of the world rise up and force a change? Let us know in the comments below!

Source: Fintech News Switzerland

Tags in this story
2008 Financial Crisis, Gold Standard, Richard Nixon, US Dollar

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Jean-Pierre Buntinx

Jean-Pierre Buntinx is a freelance Bitcoin writer and Bitcoin journalist for various digital currency news outlets around the world, Jean-Pierre also has a keen interest in Fintech and technology, and he is always open to new challenges.

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