Can Bitcoin Replace the US Dollar?

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Jack Dorsey thinks so, but it’s a conclusion that is out of touch with reality.

Jack Dorsey is an enigma. Part wizarding shaman, part Big Tech brother, very little is known about the former CEO of Twitter, a man who keeps his cards close to his chest. However, when it comes to Bitcoin (BTC), its cards are largely on the table. In a nutshell, Dorsey is truly a “Bitcoin Bro”. So much so that he believes this is the future of digital currencies and will replace the USD, the most dominant currency in the world.

Is Dorsey’s belief realistic, or is it pure fantasy?

American actor Will Rogers argued that “too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t. not like “. It’s an interesting quote that raises an interesting question: what exactly is money? Simply put, it is any object accepted as a method of payment. Not only is it a medium of exchange, but money is a store of value. This brings us to Bitcoin (BTC), the most famous cryptocurrency that exists. Is it really money? The Chinese Communist Party (CCP) does not think so. In the United States, however, a growing number of people, including a number of prominent politicians, believe so. Who is right ? More importantly, who is wrong? Because if Bitcoin fails, millions of people stand to lose a lot of money.

With cryptocurrencies, especially Bitcoin, we seem to be at a crossroads with countries like China, Turkey, and Egypt banning them, and other countries, like the United States, for example, adopting them.

Last month, Foundry USA, a New York-based finance company, became the second-largest Bitcoin mining pool in the world. “The increase in participation of US entities,” according to Cointelegraph, “can be attributed to China’s recent blanket ban on crypto trading and mining activities.” Where have all these Chinese miners flocked to? To foreign countries, including the United States.

The Greenidge Generation bitcoin mining facility sits at a former coal-fired power plant near Seneca Lake in Dresden, New York. (PA)

It’s easy to see why: at least 1 in 10 Americans have tried crypto in the past year. Bitcoin enthusiasts come in many forms, from teenagers in basements to powerful politicians. Take Francis Suarez, the mayor of Miami, for example, a man who intends to take the “100% Bitcoin” paychecks. On December 10, the 44-year-old announced his intention to take part of his 401k in Bitcoin. Meanwhile, Eric Adams, the next mayor of New York City, believes schools should add cryptocurrency to future curricula. Bitcoin, in his opinion, is “the new way to pay for goods and services around the world.”

But, you see, it isn’t. Bitcoin, like all other cryptocurrencies, is not actually money. It lacks practicality. Its inherent volatility, contrary to popular belief, makes it a bad store of value. At the same time, trying to make the necessary purchases with Bitcoin is, for lack of a better word, torture.

Oh yes, where does the value of Bitcoin come from? Absolutely nowhere. It is not linked to economic reality. Everything is imaginary. It is at best a speculative asset; a dangerous bet, at worst.

The Truth About Bitcoin

Supporters of Bitcoin often cite its decentralized nature. Unlike traditional fiat currencies like USD and EUR, it is not controlled by central banks. It is, we are told, a “currency” of the people, by the people, for the people. “

In the United States, the richest 10 percent of people now own 70 percent of the country’s total wealth. Across the country, financial inequalities reign supreme. Thank goodness, then, for Bitcoin, the great equalizer. Not so fast. A recent study by the National Bureau of Economic Research (NBER) pours cold water on the suggestion that Bitcoin exists to empower the masses. Rather, it exists to empower those who are already empowered. Bitcoin suffers from its own one percent problem, researchers say. Even more worrying, this problem is likely to worsen in the years to come.

The authors found that the top 10,000 Bitcoin investors now own at least 5 million Bitcoins, or roughly $ 230 billion. In other words, 0.01% of all Bitcoin holders now control 27% of the world’s leading digital currency. The American company Microstrategy, led by the charismatic Michael Saylor, has invested more than $ 2 in Bitcoin; Tesla, meanwhile, owns $ 1.5 billion worth of BTC. So much for Bitcoin’s ability to bridge the financial divide.

The big scam

Advertised in a very specific way, Bitcoin’s branding image is brilliant. It is the “new gold”, at least that is what we are led to believe. The term “miners” conjures up images of traditional gold diggers, armed with pickaxes and helmets, toiling in the heat, sweat dripping from their foreheads. In reality, there is no real mining. Bitcoin is created through complex algorithms executed by supercomputers that consume more power than many small countries.

Moreover, Bitcoin is not gold. It’s non-physical. It exists on the blockchain, which means it doesn’t really exist. Additionally, Bitcoin, like the blockchain itself, is hackable. Even without hackers, Bitcoin is an inadequate form of “money” at best. If in doubt, let me point you in the direction of El Salvador, a country that recently made Bitcoin legal tender. The rollout has been an absolute disaster, in large part because the average person doesn’t want Bitcoin. They want a stable currency whose value does not fluctuate from day to day. This is what happened in Weimar in Germany, and we all know how it happened. Spoiler alert: Not good.

However, as I have noted elsewhere, Bitcoin serves a purpose in countries decimated by war and systemic government failures. In places like Palestine and Lebanon, where the value of traditional currencies has plummeted, people have turned to Bitcoin as a means of survival. In these countries, Bitcoin has become the equivalent of an “emergency glass break” medium of exchange. The lack of economic sovereignty left them no other option. For the desperate people in desperate situations, bitcoin can be of great help.

But, in the United States, Bitcoin is little more than a toy for the super-rich, and a dangerous bet for mere mortals, many of whom have little savings. The US dollar has its detractors, and for good reason. The greenback has lost its appeal, especially as the current President of the United States continues to imprint it into oblivion. Two wrongs, however, do not make a right. After all, a person with gluten intolerance does not replace bread with pasta. They are looking for a healthy and superior alternative to the current problem. Bitcoin, in its current form, is not a solution to the dollar problem. Until millions of people in relatively stable environments – like the United States, for example – can use it to buy basic necessities, my skepticism will remain.

Which brings us back to Jack Dorsey’s dream of seeing Bitcoin replacing the USD as the world’s reserve currency. Maybe Dorsey truly believes that the most dominant crypto is capable of becoming the most dominant currency. However, there is absolutely no reason to believe that will be the case. As author Philip K. Dick noted, “Reality is what, when you stop believing in it, doesn’t go away. ”

The reality surrounding Bitcoin is brutal. It lacks any sort of inherent value; it is totally unregulated and tightly controlled by elite institutions and very influential billionaires. Bitcoin is only backed by faith – blind faith as some experts have argued. At least the dollar, for all its obvious flaws, is backed by the US government. Investors, on the whole, still trust the dollar. There is little reason to believe this will change anytime soon, if ever. Expect a digital dollar to replace the traditional dollar, not some totally unpredictable cryptocurrency.

Source: TRT World

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