Is There A Possibility That The Bitcoin Replaces The Dollar?

In April of this year, most cryptocurrencies reached their highest price in history and Bitcoin touched $ 65,000.

From there, a fall began that lasted until last month, with BTC falling as much as 55 percent and dragging the other crypto. Fortunately, after hitting a floor close to $ 30,000 per unit, bitcoin’s recovery began, currently at around 47,000 and registering a rise of more than 56 percent, and prompting the other crypto to do the same.

Bitcoin volatility

Before the latest bitcoin and cryptocurrency price spike, Forbes in a survey of mostly banking executives found that most of them think bitcoins and digital assets could replace fiat currencies like the US dollar in the next 5 to 10 years.

On the other hand, other financial analysts warn that there is still a long way to go for cryptocurrencies to have a massive adoption that makes them massive as a unit of account and currency of exchange, as well as a store of value.

This process began to accelerate, fundamentally from the decision of the payment company PayPal to incorporate Bitcoin as a means to pay. Later, several firms, including Tesla, began to flirt with taking Bitcoin as their payment currency.

At the same time, we must not fail to highlight the challenges in environmental matters, taking into account the high energy consumption required by mining currencies such as Bitcoin.

It should be remembered that the price of the main crypto assets tends to experience high volatility despite showing a long-term upward trend. This is because there is no bitcoin regulation that controls this.

The blockchain and central banks

The revolutionary ‘infrastructure’ of the blockchain is forcing central banks to develop digital currencies to modernize their financial systems, accelerate national and international payments, and compete with cryptocurrencies.

The Swiss Society for Financial Services (UBS) says they may have to wait a while as it still cannot be considered as money and not even a viable asset class. For bitcoin to replace the US money supply (bills, coins, traveler’s checks, and the like), its price could have to reach nearly $ 213,000, or its network processing capabilities would need to be significantly improved.

On the one hand, digital currencies would bring more transparency, lower cost, and guarantee the privacy of transactions. In the European Union, advocates claim that a digital euro would not replace cash, but would complement it to improve access to a free means of payment.

Bitcoin a market capitalization that came out of nowhere

While cryptocurrencies have the potential to become an alternative asset class, their prices are likely to remain highly volatile, attracting more speculative investors, the Swiss Society for Financial Services (UBS) noted.

The massive liquidity of the dollar and network effects are the strongest headwinds against the rise of Bitcoin, Voorhees told Decrypt while noting that Bitcoin has gone from nowhere to a market capitalization of a trillion dollars over a decade. “Bitcoin is gaining its network effect over time,” he said.

There are still many people who do not know what cryptocurrencies are, and even more who have heard them named, but do not understand them only when this happens will Bitcoin or another cryptocurrency have taken over”

It can be said that bitcoin is here to stay, leading the digital market for cryptocurrencies, demonstrating year after year how its volatility has led it to have unimaginable values and even without knowing how much it will be worth in a few years.

Conclusions

All this has created great uncertainty and for this reason, it has come to be thought that it can replace one of the currencies with the greatest weight in the world, but, to reach this objective, a massive adaptation must be given towards a new digital market for many, uncertain for others.

It is not as easy as it is said, but every day we are more directed to transcend to a digital world controlled by this market of crypto assets.

At the moment, it is a bit difficult to assume that cryptocurrencies could replace the dollar or any other strong currency on the market; however, it does not have any support; it is the currency that countries recognize par excellence.

Over the years, electronic transactions will continue to replace the use of physical money, and that is where cryptocurrencies will act to position themselves as the digital currency par excellence.

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