Bitcoin started as a peer-to-peer payment network on the edge of the internet. However, this virtual currency has gained global acceptance and adoption over the past decade, moving into the mainstream. It is without a doubt that private and public institutional investors are getting interested in this electronic currency. The US dollar has held the global reserve currency status for the longest time. However, some people argue that this virtual asset could take the position of a worldwide reserve currency currently and in the future. A reserve currency is any money a country’s central bank and other significant financial institution holds in large quantities and maintains. These institutions have reserve currencies ready for use for investments, trade transactions, or to influence global exchange rates.
This decentralized digital currency means no government or financial institution can manipulate or regulate the currency. This virtual money has an underlying technology known as blockchain that helps verify and record transactions with the help of thousands of computer nodes found on the internet. These virtual currency transactions are permanent and irreversible, meaning that the Bitcoin network does not suffer from chargebacks.
On the other hand, the value of this digital asset is unstable as it lacks backing from the government. Some argue that this electronic currency can only be a tradable commodity, not a world currency, due to its volatile nature. However, some Bitcoin enthusiasts believe this electronic currency will become a global reserve currency. Below are reasons behind the belief that Bitcoin could eventually become a global reserve currency.
Scarcity
This virtual asset has a limited supply whereby the public can only mine a 21million Bitcoins. On the other hand, Fiat currency and the US dollar do not have a limited supply. The bank can print traditional currencies and release them to the public. This printing of fiat currency leads to inflation, making conventional money lose value. Bitcoin, on the other hand, does not suffer from inflation. Instead, it is an excellent store of weight due to its scarcity, which leads to increased demand. This increased demand translates to a rise in value. Therefore, most of the public is using this digital currency as a store of value rather than conventional currency. Eventually, many people prefer Bitcoin over traditional currencies, so it could eventually become a global reserve currency.
Divisibility
Like traditional monetary assets, this virtual currency is divisible. Moreover, this digital money is more divisible than other currencies. For instance, if one cannot purchase a whole unit of this electronic money which is quite costly, one can buy a single unit. A single unit of this virtual asset can be broken down by its users into satoshis, equivalent to one hundred millionth of a Bitcoin. Therefore, if you have insufficient funds to purchase a whole Bitcoin unit, there is a valid option of buying a single unit via https://bitcoin-eraapp.com/. This Bitcoin divisibility is a huge reason this electronic currency could become a global reserve currency.
Portability
Bitcoin is a digital currency only found online; hence easily portable. The portability of this digital currency makes it easy to transact with totally. People can store this virtual currency in a software or hardware wallet, but the latter is more secure. Therefore, you can transact using this virtual currency from anywhere, as you can access your coins very fast and easily. This ease of transacting makes Bitcoin a tremendous global reserve currency.
The Takeaway
This digital asset has unique features which make it valuable and a tremendous global reserve currency. Therefore, there are higher chances that this virtual currency could become a global reserve currency.