Will Bitcoin challenge the dominance of the US dollar?

Anarchists have been trying to create a utopian society where people live without government intervention, but as long as we continue to rely on the government, it’s hard to imagine how bitcoin can fully replace fiat money.

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Will bitcoin replace the US Dollar as the world’s reserve currency? On the surface, this issue appears abrupt, but it directly challenges the current narrative of Bitcoin investment: when the Federal Reserve Prints a Lot of Money and Quantitative Easing Causes Inflation, it is expected that A Large Number Of Long Term Devaluation of the U.S. Dollar Will Be Caused. Holding Bitcoin Will Be A “Maintenance” Weapon To Resist The Devaluation Of The U.S. Dollar.

In early March, CitiGroup published a 108-page report entitled "Bitcoin at the Tipping Point," where they stated that Bitcoin could be used as an alternative currency for global payments due to its decentralized design, lack of foreign exchange risk, faster transactions, and ability to provide safe payment channels.

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The U.S. dollar has dominated the foreign exchange market for decades due to its role as the world’s primary reserve currency, and most nations would prefer to hold U.S. Treasury bonds rather than dollars because they earn much higher interest rates. However, the U.S.-dollar's dominance is coming under threat as China and other emerging markets have developed rapidly and adopted their own reserves. Some analysts predict that the U.S. won't remain the sole reserve currency forever.

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Under the new coronavirus, under the leadership of President Trump, every major central bank around the globe is issuing gigantic amounts of money, thus undermining people's confidence in many papers currencies.20% of the total amount of US dollars in circulation was printed in 2020, and the M2 money supply increased 26%, showing the largest percent increase since 1943. In retrospect, after the crisis of 2008-2009, the Federal Reserve started Quantitative Easing, which greatly expanded its size. But at the same time, Commercial Banks are reducing their lending portfolios and writing off losses on mortgages and securities, which means the Fed's capital injection is only able to offset the contraction of commercial banking's balance sheets. M2, the most commonly used monetary measure by the Fed, grew by an average of 5.8% a year in the 2010-2019 period. After decades of climbing, US debt to the rest of the world exceeds 50% of US GDP in 2020, a threshold that usually indicates a crisis. In 2020 the government's massive borrowing is expected to push our debt to 67%. Some commentators worry that when the rest of the world loses confidence in our ability to pay, the dominance of the Dollar is likely to end. Since 2016, the printing of banknotes by the Central Bank has contributed to the crazes for

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Roubini said that he thought that anonymity was an important characteristic of cryptocurrency and that centralized fiat money would be easier to monitor than decentralized cryptocurrency. He also pointed out to the fact that although governments could require that exchanges comply with Know Your Customer (KYC) regulations, this would be difficult to enforce against exchanges operating outside the country, meaning that KYC rules would apply only to exchanges located within the jurisdiction of the relevant regulator. Since cryptocurrency does not offer any anonymity, the fact that regulators can force exchanges to follow KYC rules means that governments will eventually be able to identify those involved in criminal activities and terrorist financing. Some supporters of the technology argue that the anonymity provided by cryptocurrencies like Bitcoin is a major attraction for users and that these features will prevent them from being used for illegal purposes. Critics say that cryptocurrencies are inherently unsuitable for anonymous crime due to the lack of anonymity surrounding transactions. For example, according to one report, in December 2017, the New York Police Department confiscated $1 million worth of bitcoins after tracking the digital currency through blockchain analysis. Supporters of cryptocurrencies counter that this kind of analysis is impossible without prior knowledge about the identity of the user. They also point out that the fact that cryptocurrencies do not hide the source of funds is actually a benefit because it allows regulators to trace illicit activity back to its origin.