For more than the last 100 years, the US dollar has reigned supreme over the rest of the world as the global reserve currency. But with the economy in shambles, and hyperinflation inbound for the US dollar, will Bitcoin unseat the dollar as the global reserve currency that rules for the next one hundred years?
Recapping the History of Global Reserve Currencies
Throughout history, every one hundred years or so, the dominant financial superpower changes hands, and so does what the world relies on as the main global reserve currency.
Following World War II, the Bretton Woods agreement placed the United States dollar as its central anchor, putting it in favor as the global reserve currency across the world.
Related Reading | Will Bitcoin’s True Value Proposition Shine During End of Times Scenario?
Before the dollar, the British pound sterling served as the global currency during the 19th century. Prior to that, it was the French franc, and before it, the Dutch gilder dominated the 18th century due to the Dutch East India company’s monopoly over global trade.
But the world has since changed dramatically, and much of the global commerce and trade is conducted digitally. The digital age is causing fiat currencies to show signs of aging, and signals that a new currency is necessary to keep pace with the change in technology.
Reserve currency status usually lasts about 100 years. The petrodollar certainly had a good ride last 100 years. At some point people just stop accepting them for goods (like oil, gold, food, houses etc). pic.twitter.com/SLKWPeQ2RH
— PlanB (@100trillionUSD) March 26, 2020
Can Bitcoin Unseat the United States Dollar As the World’s Reverse Currency?
Bitcoin is a digital-only currency, and the world’s first decentralized cryptocurrency existing and operating without a third-party’s control or intervention, giving it a unique benefit that current national currencies cannot: a separation of money from state.
Nations across the globe are all scrambling to create native digital currencies of their own to merge the advantages of cryptocurrencies like Bitcoin with their own dominant fiat currency.
China has reportedly completed the creation of a digital currency recently, and the mention of a digital dollar began appearing in a recent economic stimulus bill.
In today’s climate of global conflict and the ongoing power struggle between the United States and China, the next global reserve currency would ideally not have any connection with a specific nation.
Bitcoin was created during the last economic recession as a means to prevent future issues from recurring and featured many attributes that make it more favorable over any digital currencies issued by countries like China or the US.
Being decentralized and outside of any nation’s control males the asset particularly valuable, and smaller countries could favor Bitcoin rather than submitting to a global superpower’s native currency as its reserve.
Related Reading | Economist: Government Overspending Amidst Crisis is Bullish for Bitcoin
Bitcoin is hard-capped so only 21 million can ever exist, while digital currencies could be created at whim, much like the printing press-driven paper currencies dominating the world today.
In the coming age of hyperinflation due to the economy falling into a full death spiral, Bitcoin’s scarcity could help it reach astronomical values.
And with additional benefits that could help it thrive in today’s strange new world, such as being contactless and impervious to the coronavirus, it may not be long until we find out if Bitcoin can unseat the dollar and become the global reserve currency.