Owatonna, MN Correspondent-When you think about all the forms currency has taken in the world since humans began to trade goods and services with each other, it is certainly a possibility that some type of digital currency may become the reserve currency of the world. After all, currencies have taken the form of gold, silver, copper, salt, shells, even cigarettes (in prison and prisoner of war camps). Why not add electrons to that list?
But let’s consider why a digital currency won’t become the world’s reserve currency. The keyword here is reserve. Digital currencies such as Bitcoin are gaining popularity among individuals and some businesses who see it as an easier, safer way to transact business, but digital currencies are still voluntary, and not government sanctioned.
The first argument against a digital reserve currency is the fact that it is highly unlikely that 200-plus nations of the world will ever agree on one standard currency with which to trade important commodities like oil, gold, and silver.
The second argument against a digital reserve currency is the assumption that for a reserve currency to work that won’t be tangible, physical money, virtually every person in the world will have to be connected electronically via the internet. Every business in the world will also need online capabilities. Even in wealthy countries like ours, only some 95-97% of the population has internet access.
The third argument against a digital reserve currency is the mistrust many people have of their governments and financial institutions to accurately safeguard their assets and guarantee they won’t be subject to tracking or confiscation either for a perceived crime or some bogus national emergency or mandatory tax increase. The security of knowing all of one’s assets are paper dollars stuffed under a mattress or hidden in a safe and the government has no way of tracking or taking those dollars short of invading your home and forcefully searching would preclude a large part of the population from accepting a digital reserve currency.
For these reasons, a digital reserve currency will be much harder to accomplish and won’t likely happen for decades, if ever.
Gastonia, NC Correspondent– I can easily see digital currencies becoming the “world reserve” in terms of finance and commerce, and I think it will happen soon. With faith in various world governments wavering and business becoming more global by the day, the rise of a system of exchange not tied to any particular country is, to me, inevitable.
In my early 20s, when credit cards were just becoming ubiquitous but things like PayPal and other electronic payment systems were still decades off, I was never without cash in my wallet. Living in the slums of southwest Houston, frequently I was in need of $20 or $100 in folding green to get my car fixed, buy things at a flea market or conduct any one of a thousand other “small” transactions that required cash.
A couple of years ago, I obtained a Square for my sons’ Cub Scout troop. For those unfamiliar, the Square is that little white plastic dingus that plugs into a smartphone, turning it into a credit card processing machine. Our pack popcorn sale was no longer a “cash only” operation, and our sales soared. The next year, I saw Girl Scouts with the same device hawking their frighteningly tasty cookies.
Of course, the currency behind these devices is still dollars, but it wouldn’t take much of a stretch to convert the payment to bitcoins or whatever other form of digital exchange is mutually agreed upon by the world’s financial wizards. There will be resistance from world governments, of course, as giving up their currencies will mean difficulties in collecting taxes, etc. However, they will adapt once it becomes apparent that if they don’t the commerce will happen anyway, and they won’t be able to collect their pound of flesh in the process.
So, get ready for that bum on the streetcorner to be asking to scan your phone for a bitcoin donation sometime in the near future!
Prescott Valley, AZ Correspondent- It seems that the path has been set for digital currencies to become the reserve currencies of the globe. The world is turning to digital money like Bitcoin and other cryptocurrencies for a number of reasons.
The reasons behind these developments and the real possibility that cryptocurrencies will become viable currencies can be attributed to the thrust of technology that has allowed for quick buying, selling and investing, particularly when people from all over the world are trying to escape the use of fluctuating fiat currency to pay for goods and services, as well as for other purposes, such as entrepreneurship and investment.
Another reason for digital money heading towards global use is that most anyone can use it to make a transaction without connection to a banking or regular money system. Worldwide use of digital money is increasing because of easier access to sources such as Bitcoin and other cryptocurrencies, like Ethereum, Monero and Litecoin. Rumor has it that retailers from around the world will soon be accepting cryptocurrencies in payment for their goods, which also alerts investors to renewed confidence in digital currencies.
As most cryptocurrencies are open to the general public for use, they are extended to almost anyone who wants to avoid dealing with the legal tender of a home country, plus online use makes for easy access for business dealings concerning products, services and investments. Platforms of privacy, flexibility, performance, functionality and probable long-term success make digital money an asset.
Other reasons digital currencies may become alternative currencies include their ease of transaction from one person or entity to another, their decentralized nature and their classification. Cryptocurrencies are digital in form and designed to operate as sources of exchange through the use of certain formats, so those who are using it can read and administer them more easily.
With decentralization there is no main governing authority, like a central bank or a bureau of finance to oversee operations. For example, Bitcoin goes through a process of “Bitcoin mining”. This allows them to be sent anyplace, at any time, with limited expense and concern for bank limits, restrictions and a country’s borders, plus Blockchain technology allows a community of people to write entries into a compilation of records of information, and members of the community can control how the information is changed and updated.
People throughout the world are enthusiastic about cryptocurrencies because of the possibility of them replacing fiat currency, and they are also excited about digital currencies like Bitcoin and its increase in value. It has seen surges because it is viewed as a safe asset and has been likened to (digital) gold. With a meteoric rise in value, investors are looking at Bitcoin and other cryptocurrencies as eventual substitutes and replacements for reserve currencies.
Arguments against cryptocurrencies are attributed to its non-physical nature, or not being able to hold it in the hand as a substance, but these arguments are hard to justify when a majority of the world’s fiat currencies are not backed by gold or some other valuable resource, plus many fiat currencies are stored in a digital manner rather than in paper.
Many countries are pushing to reduce the use of paper currency in large denominations because of the insignificant nature of paper money. With this in mind, the demand for cryptocurrencies grows and trading can be done in a more secretive manner. Some investors prefer not to use currencies that can be printed at the whim of a centralized bank or federal authority, as past history has proven that fiat currencies have been abused.
Though Bitcoin and other cryptocurrencies like Ethereum have cult followings, there is a clear upward trend in the value and acceptance of and interest in digital money as a means of exchange. If any investing forecasting is to be taken seriously, it is likely that fiat currencies will fall by the wayside to some extent, if not completely, and cryptocurrencies may eventually replace them, particularly when there is no central authority, government interference, or manipulation in the mix.
With the transparency, security and decentralized nature of cryptocurrencies, there appears to be the possibility of a number of them becoming replacements for or favored currencies of the world, and the adoption of digital currencies and Blockchain technologies are definitely in the cards or, perhaps, the coins for the future of transactions across the globe.