We can. But how would governments react?
Until the 1970s, commodity money was in use to keep the money valuable. But Nixon’s reform has led money to be dependent on trust towards the government. However, Bitcoin’s emergence allowed whether it can be used as a standard for national currencies. Here, we’ll discuss whether Bitcoin can be used as a global monetary standard.
Two parties are arguing whether Bitcoin could be counted as a currency: the first party defends the use of Bitcoin as a monetary standard. The second party is against the use of Bitcoin as a monetary standard for a variety of reasons. Let’s jump into both parties.
Arguments In Favor Of Bitcoin As A Monetary Standard
The main argument lies in its capped supply and serving as deflationary money. Therefore, its value can be useful for national currencies to dramatically increase the purchasing power of individuals. Even more, governments and central banks print too much money to fund their programs, and help to save poorly managed companies that seem “too big to fail.” As the money supply would entirely depend on the value of Bitcoin, this problem would be solved for good.
However, there are strong arguments against Bitcoin as a monetary standard:
Arguments Against Bitcoin As A Monetary Standard
Various people and governments state that Bitcoin is nothing but a bubble. Therefore it cannot be trusted as a method of payment or a standard. Even more, the volatility and difficulties transacting on cryptocurrencies are too much for an individual to bear.
When we look at the arguments from the governments, Bitcoin can neither be a method of payment nor a standard. When we look at the method of payment, its value fluctuates constantly, and it’s difficult to transfer around the networks. So, it can be difficult for most parties to make payments.
The second argument of governments is that Bitcoin is used for criminal activities, and it’s a bubble. Therefore, only central bank digital currencies (CBDCs) could be used to control the value fluctuations.
As both arguments having strong positions, there are some things to consider for states: firstly, they don’t want to give up the power of printing money. Secondly, they want to control everything, and money supply is the best way to control en masse. For corporations, Bitcoin could be detrimental to their market share and power when considering there are no centers to control. Only market mechanisms control the value. Therefore, Bitcoin might not be used as a monetary standard, and it’ll likely be a security in the future.
What do you think about Bitcoin? Can Bitcoin serve as a standard for money? Share your thoughts in the comments section below.