A couple weeks ago I wrote an article titled, “Bitcoin Is a Currency and Not a Financial Sector.” In this article I pointed out that there is a lot of confusion around where does a currency fit into the global reserve currency game. However, one thing I never said was that it could not fit into the global reserve currency game. In fact, I argued that it would be better to consider it as an alternative reserve currency than the dollar.
Since that article appeared, I have had a lot of people ask me where does it fit in the global reserve currency game? To answer that question, I think it is safe to say that it will not replace the dollar anytime soon. It may well become the first and most widely used reserve currency, however. As a matter of fact, if things continue on the current path, it may very well overtake the US dollar within the next decade. It has already supplanted the Japanese Yen, Euro, Swiss Franc, British Pound, Canadian Dollar and Australian Dollar.
To be perfectly honest, I would not be surprised if the world government decides to stop issuing the US dollar as the world’s global reserve currency. In fact, I think they are already planning for that day to come. However, as far as currencies go, the US dollar is not going anywhere anytime soon. Why? Because it serves its purpose and serves the interests of the United States.
Now that you know a little bit more about the global reserve currency game, where does it fit in? Well, it is an extremely important part of the equation. For instance, it determines the value of the currencies of many different countries around the world. So, if the value of a currency drops, the value of other countries’ currencies also drop and vice versa. When the global economy is strong, countries with stronger currencies tend to gain currency values.
Another key role that the world reserve currency plays is that it acts as a hedge against inflation. This is important for many reasons including because it keeps people from trying to print too much money. to pay off their debts or pay for luxuries like vacations. or holidays.