Bitcoin and cryptocurrencies generally are on the rise. Big brand names such as eBay are stating they will start to accept the currency for payment. Arguably, this will be the biggest brand in the world to do so.
This not only marks a change in Bitcoin’s acceptance but given its rise the question that is increasingly asked is: Could Bitcoin replace the US dollar as a global currency becoming an international settlement layer?
You may be surprised to know that many experts believe it can.
Research from Imperial College London
According to research carried out by Imperial College London and eToro who you will find on https://www.bestbitcoinexchange.net/, cryptocurrencies are moving to a point where they can replace fiat currencies that are in circulation at the moment.
The research suggests that there are three criteria to traditional currency. They are:
- A store of value
- A medium of exchange
- A unit of account
Currently, all cryptocurrencies are a store of value. One of the authors of the study, Professor William Knottenbelt said,
“There’s a lot of scepticism over cryptocurrencies and how they could ever become a day-to-day payment system used by the man on the street. In this research, we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”
The other aspect that is sure to work in favour of Bitcoin is the fact we are moving towards a cashless society. Sweden is already cashless and China is not far behind. This is partly driven by the Middle Kingdom’s desire to implement its social credit score.
Those that argue for Bitcoin to be the dominant currency in the world point out that it is censorship resistant. As it is not the currency of a single country many argue it is perfect to be used internationally as a settlement layer.
Some detractors, however, have stated that Bitcoin and cryptocurrencies generally are too volatile to be an everyday currency. Coinbase CEO Brian Armstrong refutes this stating, “Volatility is a self-correcting problem and we’ve seen that as it’s dropped in the last three years, year-on-year.
“I foresee it continuing to do that over the next few years.”
Perhaps, however, one of the major factors that prevent the use of a cryptocurrency as a worldwide currency is the lack of a central bank. Currently, the central banking system controls the world’s money supply. Many countries issue debt when they issue currency and this as you can imagine is lucrative for high finance and the banking industry.
Furthermore, austerity has hit the EU countries with the Euro currency harder than it has hit EU currencies that have their own currency. There are several reasons for this but one is that they no longer have their own national bank. Instead, they have branches of the European Central Bank.
This may lead to a worldwide rejection of Bitcoin both at the political and people level.
That said, with a global push to go cashless and the advantages Bitcoin has, this could see the currency used as an international settlement layer replacing the U.S. dollar.
For more information visit Bitcoin.org to keep up to date with developments.