Image source: Bitrawr.If the past 700 years is any indication, reserve currencies have a shelf life of about 100 years. The United States dollar (USD) officially became the world reserve currency 77 years ago (Bretton Woods, 1944). No doubt USD was the reserve as early as the late 1920s. Source: “Will a digital gold rush save the US economy?” Cryptokek Blog. From a historical timeline perspective, the USD is in the twilight of its reserve status. Couple that with the fact that the United States is also expanding its money supply exponentially (devaluing the purchasing power of USD’s existing supply), and to put it politely, this rate of growth is unsustainable. For the record, the US The Federal Reserve does not operate in isolation. Most major central banks around the world are following this trend. Examples include the European Central Bank (ECB), the Bank of Japan (POJ), and the People’s Bank of China (PBOC) to name a few. Frankly, most major central banks are racing each other to see who can lower their currencies the fastest. Source: Haver Analytics. Stanley Druckenmiller, considered a legendary investor partly because of his study of history and macroeconomics, believes the USD will lose its reserve currency status within 15 years. fiscal policy, this was out of step with economic conditions, not one.” — Stanley Druckenmiller So, if the USD has a sustainability partly because of historical primacy and partly because of fiscal irresponsibility (overpressure of the money supply), what comes next? What replaces The USD? Another fiat currency? It’s possible, but I think the days of relying on a centralized party to maintain a stable supply of currency have come and gone. Why trust, when you can just do it An argument could be made that gold is the current reserve asset as it is owned by the majority of central banks For me gold is the past while Bitcoin is the future Bitcoin is decentralized easy to verify , immutable, shareable with a known supply and can be easily merged into an ever-expanding digitizing global economy.Bitcoin is already a w currency in El Salvador, a status hard to match for gold due to its transportation and divisibility restrictions. There is a tidal wave of Bitcoin adoption across various sectors of the economy. Retail, institutions, governments, pension funds, REITS and banks all collect bitcoin. The diversity of accumulation drives acceptance of “game theory,” accumulation that happens much faster than most had predicted. For example, El Salvador became the first government to make bitcoin legal tender in September 2021. Today, there are more residents with Bitcoin wallets than traditional bank accounts. As of October 2021, El Salvador’s exports of goods grew 34% in 2021, while gross domestic product (GDP) is projected to exceed 10% in 2021, making El Salvador one of the fastest growing economies in Central America . Source: @DylanLeClair_El Salvador continues to acquire bitcoin at a rapid pace and now owns approximately 1,220 bitcoin at the time of writing this article. Bitcoin adoption is an accumulation race. The thing is, most don’t realize that the gun has already gone off and the race has begun. Ask Michael Saylor of MicroStrategy if they plan to sell, let alone stop collecting more bitcoin. At the government level, Laos mines bitcoin. They expect to earn $190 million dollars from bitcoin mining by 2022. Tonga is actively drafting legislation to make bitcoin legal tender by the fall of 2022. Panama, Zimbabwe and Ukraine are all investigating possible adoption. Singapore wants to become a Bitcoin hub. “We think the best approach is not to restrict or ban these things,” said Ravi Menon, director of the Monetary Authority of Singapore. The president of El Salvador is currently in Turkey, the first G20 country to experience near hyperinflation. I suspect Nayib Bukele would bring out the benefits that using bitcoin as legal tender could bring to the Turkish people. In any case, like China, which chose to close its doors to Bitcoin, there are two other countries ready to embrace it. You cannot ban Bitcoin, a country can only choose to ignore it, but Bitcoin is not going away. Ignore at your own risk. Bulgaria holds 213,518 bitcoin, Ukraine holds 46,351, Finland 1,981 and El Salvador, at the time of writing 1,220.Source: Buy Bitcoin Worldwide. the hand of the government. Nigeria and Turkey are two good examples. Grassroots citizen adoption (retail) takes place in countries all over the world. In 2020, according to Statista’s global survey, 32% of citizens in Nigeria, 21% in Vietnam, 20% in the Philippines, and 16% in Turkey and Peru reported using or possessing “cryptocurrencies.” Source: Statistics. Business accumulation also takes place. As of June 2021, 34 public companies collectively own more than 213,000 bitcoin. MicroStrategy and Tesla are the largest. The majority of companies that have adopted bitcoin have done so in the past 18 months.Source: Buy Bitcoin worldwide. Google partners with Bakkt to provide Bitcoin payment solutions. Twitter has enabled tipping through the Bitcoin Lightning Network. Bitcoin has the ability to be the native currency of the internet, as predicted by Milton Friedman in 1999. One of the most prominent US real estate investment trusts (REITS), SL Green Realty Corp. in bitcoin with a $10 million investment in a bitcoin fund. Banks are another industry sector that is actively embracing bitcoin after years of trying to actively ignore and fight it. Banks make their money by lending out their assets. The Commonwealth Bank of Australia has enabled 6 million of its customers to buy bitcoin. Banks must choose to adopt bitcoin or risk becoming irrelevant. Pension funds and insurance companies are also starting to gain exposure to bitcoin. The Houston Firefighters Relief and Retirement Fund (HFRRF), in partnership with NYDIG, purchased $25 million in bitcoin (and ether) in October 2021. MassMutual also bought $100 million in bitcoin in December 2020. The reason pension funds and insurance companies are attracted to bitcoin is because they need to save their monetary energy (purchasing power) for the future. With inflation levels at the ten-year high, cash savings (in fiat) are devalued. These funds are forced to make riskier investments in search of higher returns, in order to maintain their purchasing power which is devalued by inflation. Holding bitcoin is easier as bitcoin offers the opportunity to save due to its deflationary nature. ) cannot go back into the tube. Adoption has grown to a saturation level (in terms of scale and diversity), making a future bitcoin standard for the world inevitable. The majority of the world has blinders on and cannot see this or the tidal wave of adoption and accumulation that is taking place. Source: Visual Capitalist. Paul Tudor Jones puts it best: “Bitcoin has this huge contingent of really, really, smart, sophisticated people who believe in it….You have this group – which is crowdsourced all over the world, by the way – that is dedicated to mining Bitcoin. see succeed in becoming an everyday store of value and transaction to boot. the adoption rate continues to increase. This is a guest post by Drew MacMartin. The opinions expressed are their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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