It is interesting to note that thousands of businesses in many nations of the world are already accepting Bitcoin, which is reputed as the world’s first digital currency. With the mulling of more countries towards the adoption of this technological revolution taking place in the world of finance, this is a litmus test to the prospect of Bitcoin assuming the status of future world’s reserve currency, with decentralized features.
Following the trajectory of Bitcoin in the financial market, there appears to be a linkage between Bitcoin and blockchain technology with the future of global financial setup.
As the government has the power to regulate how much money is being printed and its distribution, Bitcoin miners use sophisticated computers to solve complex mathematical puzzles im exchange for Bitcoin.
This in turn brings more Bitcoin participants to the table while ensuring Bitcoin is safe and secure to use, hence expanding its network.
With the distinguished decentralized feature Bitcoin is touted for, it has the potential to serve as a new reserve currency in the world.
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Bitcoin And Its Value
From the ancient world to the medieval age, grain was used as a currency, an instance that wasn’t far from tobacco being used to bankroll Virginia’s financial system. However, a paradigm shift to metal coins is defined with inherent values on such coins, which is largely dependent on the precious earth metals like iron, silver, gold, and copper used to mint the coins.
Broadly, most of the fiat currency used serves no purpose other than as money. But the narrative is quite different for Bitcoin as its value is prevalent for as long as people believe in it. Its value is only subjected to a fall in the event of people’s lack of trust in it. At the time of writing this article, the price of Bitcoin is about $38,000 with a market value of approximately $733 trillion.
Ways Bitcoin Is Becoming A Trusted Global Currency
Bitcoin should have been the sixth most valuable reserve currency in the world, by 2030. On the heels of the recent economic crisis as a result of the huge blow of the pandemic to the global economies, countries like China are on the look for a new global reserve currency.
Also, the European Union (EU) has announced the exemption of Bitcoin and other digital currencies from taxes like a value-added tax (VAT), which in turn would give the viability of Bitcoin as a currency a boost.
1. Changing Money Transfer Process
Bank-to-bank transactions are and wire transfers can sometimes be fast, albeit there is still much to be done. For the completion of an international transfer, it may take more than a week of clearance and deposit to be achieved.
The story is entirely different in cryptocurrency transfers; transactions are instant, fee-free, and can be easily tracked and stored securely in the blockchain network.
2. Providing Control
It is doubtful that many people are wary of performing transactions with banks and other financial institutions, but keeping money at home is not the best option. This is because any economic doldrum may lead to huge anxiety and concern about the funds being set aside.
In the case of cryptocurrency, people have the power to transfer their money from banks to them. Its operation is devoid of financial regulations from the government or financial organizations.
3. Reducing Your Vulnerability To Identity Theft
Fraud is always a major problem predicating money. From money transfers to using credit cards on an insecure site, the risk of fraud has always been prevalent. Victims of scams can attest to this fact.
But this is different in Bitcoin, as it is not in any way linked to your bank account because funds are moved electronically with the blockchain keeping the transaction record. So the fear of fraud is allayed with cryptocurrency.
4. Being A Safe Alternative
There is a clear difference between Bitcoin and traditional financial systems when it comes to security. Despite the security framework put in place by financial systems, hacking and phishing attacks are imminent.
Bitcoin is a cryptocurrency that is encrypted using cryptography to protect digital transactions and forestall the creation of fake digital notes in fiat currencies.
Bitcoin transactions pose a great difficulty for hackers to access due to its advanced encryption techniques.
5. Being A Stable Alternative
The level and impact of inflation with volatility in some countries can not be underestimated. While some countries are grappling with the bullish inflation rates, others might just benefit from the benefit of shifting to cryptocurrency.
Cryptocurrency is accepted across borders without exchange or interest rates that characterize fiat currencies. So Bitcoin has the potential to improve the economy of developing countries to stability.
Bitcoin has interesting features that could well-position it as a potential contender for the future world’s reserve currency. This is owed to its ecosystem built in such a way that it is resistant to financial manipulations, hence making it best fit as a global reserve currency.