Coinbase CEO Brian Armstrong noted the possibility of digital currencies and cryptocurrencies such as Bitcoin replacing reserve currencies such as the US dollar, at the Token Summit held on May 25, 2017 in New York City.
Over the past year, Bitcoin has shown a meteoric rise in value. Year-to-date, Bitcoin has already recorded a 375 percent increase in price, surging from the $900 region to $2,400. Analysts have attributed this recent surge in the price of Bitcoin to the growing global awareness toward Bitcoin as a safe haven asset and digital gold.
Independent, transparent, decentralized, secure
Both casual and institutional investors consider Bitcoin as a safe haven asset due to its decentralized nature and independent network. Within the peer-to-peer Bitcoin network, users can send and receive transactions without the existence of intermediaries and third party service providers. Because of this financial independence which Bitcoin represents, analysts and investors have recognized Bitcoin as the alternative to today’s existing banking and financial systems.
More importantly, mainstream media, prominent entrepreneurs and high-profile investors have suggested the possibility of Bitcoin potentially replacing reserve currencies in the future by providing an independent, transparent, decentralized and secure financial network for users.
During his presentation at the Token Summit, Armstrong stated:
“I do think some digital currency will end up being the reserve currency of the world. I see a path where that’s going to happen.”
Native Blockchain applications receiving massive adoption
Fred Wilson, the billionaire founder of early-state investment firm Union Square Ventures, also stated that the widespread adoption of cryptocurrencies and Blockchain is imminent. He also expressed his optimism toward Bitcoin, the world’s largest cryptocurrency by many measures which he has supported since 2013, and a potentially larger market Bitcoin could target with the resolution of scaling issues.
“By the end of this decade, we should start to see native Blockchain applications receiving massive adoption,” said Wilson.
Both Wilson and Armstrong along with most cryptocurrency investors often avoid generalizing cryptocurrencies or digital currencies such as Bitcoin and leave the possibility of other cryptocurrencies – digital currencies such as Ether, Monero and Litecoin could supplement Bitcoin in terms of anonymity, flexibility and functionality – experiencing long-term success alongside Bitcoin.
Evidently, Bitcoin would have to mature as a technology and solve some of the existing technical difficulties such as scaling and the implementation of two-layer solutions. In order for Bitcoin to become a currency and a digital cash system, its fees would need to decrease significantly and provide faster confirmation speeds.
If Bitcoin continues to grow and evolve in terms of market cap, user base and technically, Bitcoin will position itself toward becoming a reserve currency in the future.