Will Bitcon replace the US dollar as the world currency ?

Despite the fact that the dollar exchange rate in the world is steadfastly held, the dollar is losing its position as the world's reserve currency, and bitcoin has already begun to gradually replace it as a payment and savings tool. In the future, this process will accelerate, and there are several reasons for this.

Firstly, the dollar has held the status of a reserve currency for 100 years. In the past, only five countries had this status: Portugal, Spain, the Netherlands, France and the United Kingdom. The currency of each of these states maintained its dominant position for an average of 94 years. This raises the question of how long the dollar will last, and what will become its successor.

The dominance of the dollar is likely to end when the world begins to lose confidence that the US can continue to pay its obligations. This became a prerequisite for the fall of reserve world currencies in the past.

Cryptocurrency can claim the status of a reserve. The demand for bitcoin increased during the crisis due to the decline in public confidence in national currencies. They are devalued due to the policy of states to print money. This is the reason why investors started buying bitcoins in bulk during the pandemic. As a result, BTC has risen in price by 400% since March and has become one of the best investments of the year. Even after the end of the pandemic, countries are unlikely to stop issuing additional currency.

Secondly, bitcoin began to be used by small companies in the framework of international trade. This mainly concerns countries such as Nigeria, where there are difficulties with the turnover of dollars, and like Argentina, where the exchange rate of the national currency is extremely unstable. An additional driver of the spread of cryptocurrencies in this vein was the participation of PayPal. In November 2020, the payment system added support for BTC and three more coins for American users and announced that next year customers in other parts of the world will have access to similar functions. In September 2021, Salvador recognized Bitcoin as its national currency.

The third factor is a gradual decrease in skepticism about the cryptocurrency. Bitcoin and other coins are viewed negatively mainly by those who grew up in the non-digital era, that is, the older generation. The young, on the contrary, are more supportive of digital assets. According to statistics, 27% of millennials own them, and this share is growing.Demand for cryptocurrencies will also continue to increase from tech-savvy people, and this trend will intensify as governments introduce regulation of digital assets.

The rapid rise in the price of bitcoin may still turn out to be a bubble. But even if it bursts, the rise in the price of cryptocurrencies should be perceived by the countries printing the currency as a signal. National currencies, especially the dollar, will not always be the only trustworthy means of exchange or payment.

And how it will actually be, time will tell.

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