Bitcoin

Can Bitcoin Become The Global Reserve Currency?

Over the past ten years, Bitcoin has ventured from the depths of obscurity to the dubious status of “nerd money” before becoming something else entirely. Once used only for dark web purchases, test transactions, and games like Satoshi dice, the currency has taken the world by storm and now trades over $5 billion worth every day.

That’s €4.4 billion, almost £4 billion pounds, or around 17.4 million BTC. There are a number of ways to express the value, but for an international audience of readers it’s usually the done thing to list a value in USD – that’s because the USD is currently the global reserve currency.

USD as a Global Reserve

The US dollar has reigned supreme for only a very short time, about 80 years. Before that it was the British pound sterling, and the French franc, the Florentine floren, and a number of others throughout the ages.

A global reserve currency is simply the currency held in the greatest quantities by the majority of world governments and institutions in addition to their local currency. The USD is recognized as a valuable and relatively stable currency by fiat standards with an inflation rate of around 2.25% per year.

As a result, when the value of a transaction or item is being discussed in an international forum, the USD is often viewed as a kind of “default” currency of conversion.

Crypto Prices in USD

An often-cited issue in crypto’s war of independence with fiat is that the prices are very commonly referred to in USD terms as opposed to their crypto value. Crypto is volatile, and it’s not really at a stage where it’s viable or practical to list the values in cryptocurrency only because the value changes so often.

A caveat to this, of course, is the habit crypto traders have of measuring their gains in satoshis (the smallest possible unit of Bitcoin) as opposed to USD or other fiat currencies. Although crypto traders are often among the least evangelical crypto supporters and many of them are in it strictly for the fiat gains, they find it worthwhile to count satoshis instead of cents because the entire crypto market is dictated by the price market of the ever-dominant Bitcoin.

At least in the crypto markets, then, Bitcoin reigns supreme. But can Bitcoin ever achieve such a feat in the wider world? Could Bitcoin one day overtake the USD or potential fiat successor as the global reserve currency?

This is no small task, and of course many (perhaps most) believe that it’s not possible, while maximalists see it as the only possible outcome of Bitcoin’s evolution. Let’s take a look at the various factors setting Bitcoin apart from the USD.

Bitcoin as the Global Reserve Currency

Bitcoin’s main strength here is also its weakness in this regard – it doesn’t have a nation. No nation, no creator, no political agenda. It just is.

While in the short-term, such a feature causes international authorities to balk at the project. Unlike the governments behind the dominant fiat currencies of the world markets, Bitcoin cannot be bargained with, negotiated with, reasoned with.

You can’t strike a trade deal with Bitcoin or discuss adjusting the supply and controlling the rate of inflation. Bitcoin’s value will be dictated by market players and its supply will run out in around 100 years, and that’s it.

This makes global economic control somewhat difficult, but of course, that is exactly the appeal of Bitcoin as well, and even among state governments there must be those to whom the idea of a global reserve currency that doesn’t inherently tip the balance of power to any one nation seems promising.

For Bitcoin to ever be considered as a global reserve, the price must stabilize or at least appreciate in a more predictable manner. How or if that may be achieved is as of yet unclear, but with more and more interest and money flowing into the cryptocurrency it certainly seems possible.

From there, the more governments trading in Bitcoin, the better. Governments, mainstream financial institutions, average citizens. Access to Bitcoin isn’t as restricted to international citizens as USD is in some countries. The transaction fees are lower, the transactions are faster, and adoption is spreading.

Technically, the answer to the question of how BTC could become the global reserve currency is that the process has already begun… but what the ultimate outcome of that journey will be is yet to be seen, and will unfold over the course of several years or even decades.

One way or another.

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Interested in other cool crypto content? Check out Interview with Cryptocurrency Analyst Murad Mahmudov and Hardware Wallet Review: Trezor Model T vs Nano Ledger S

Cryptos Price analysis for Week two of October: BTC, ETH

The second week of October saw major pairs record bearish trends. Prices for the top cryptocurrencies as well as all crypto recorded big nose dives. This was attributed to mass sell-offs of investments held in cryptocurrencies.  However, a 10% increase in price of all major cryptos apart from Tether was witnessed today- 15th October. The sudden rise in price this morning was attributed to a sell-off of the dollar-linked tether digital coin — the only cryptocurrency which is down today.

BTC/USD pair

Price for the pair began on a high of $6730 before spiraling on a downward trajectory over the next three days. A worrying low was witnessed on Thursday 11th October due to mass sales in crypto which amounted to a 7.6% loss in price. The increased supply orchestrated a sharp fall in price which breached the support level set at $6400.

On that same day, the 30-day moving average crossed over the 9-day moving average indicating a bearish trend. From then on, prices have been on a triangular divergence, rebounding upwards to a new high of $7788 on Monday, October 15.

Bitcoin USD 1 week price

ETH/USD pair

The pair has been struggling with unstable and low prices since September. This pattern has been replicated in October. The second week of October kicked off on a high of $234 and consequently went on a bearish trajectory. It dropped over the next three days due to mass dispositions in securities held in crypto tokens by investors.

The week saw the pair register a 21% loss in price value after taking a sharp nose dive to a low of $184, breaching the psychological support level of $216. However. The resistance level of $200 (on 1 day charts) was broken on 11th October when prices went up to a month-high of $242.

Etherum USD price analysis

How money flows into and within Crypto (cool visualization)

Cool visual representation of how money flows in cryptocurrency from coinlib.io. Really easy way to view how money comes into crypto from fiat currencies and how it moves within the ecosystem once it’s there.

USD still leading the way on boarding money into cryptocurrency, but not by much. The Japanese Yen, USDT (Tether) and the South Korean Won following closely behind with the Euro still not making much of a dent. Binance recently announced that they will add Euro trading pairs on their platform which could be a game changer for European client and institutional onboarding. Helps that they’re based and licensed in Malta. Would be interesting to see how other exchanges like Bittrex, Bithumb, Upbit and others react.

Once in Bitcoin, we see how money flows from BTC into alts the past 24 hours. Ethereum leading the was as expected with newcomer EOS coming in second. Bcash still capturing some of that Bitcoin money and lots of much smaller projects making up the rest. One noticeable trend is how protocols lead the way here over Dapps. It seems that people still value protocols as a safer store of value…especially in this current bear season. Ethereum Classic, EOS, Bitcoin Cash, Litecoin, Tron, Qtum, Neo and many more make this list.

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