While fiat currencies have their own set of contradictions and issues, such as the risk of inflation due to unlimited supply and potential political interference in monetary policy, the concept of Bitcoin as a global reserve currency faces significant challenges that make it unrealistic in practice.
The primary issue lies in Bitcoin's fixed supply and current distribution. With approximately 74% of the total Bitcoin supply held by entities with no liquidity, the amount of circulating Bitcoin available for global transactions is severely limited. This scarcity would create an enormous and unsustainable deflationary pressure if Bitcoin were to be adopted as a global reserve currency.
To function as a reserve currency, each Bitcoin would need to be valued at millions of dollars, far exceeding its current price. This astronomical valuation would lead to several issues:
Extreme wealth concentration among a small group of early adopters.
Practical difficulties in using fractional amounts for everyday transactions.
A severe deflationary spiral as people hoard Bitcoin, expecting further price increases.
Economic stagnation due to delayed spending and investment.
These factors combined make Bitcoin, in its current form, impractical as a global reserve currency. While it may serve other valuable functions in the financial ecosystem, its fixed supply and current distribution patterns create insurmountable obstacles to its adoption as a primary global currency.
yaaman
npub1n0…mr62v
2024-09-07 11:17:08
in reply to nevent1q…yw5c
Author Public Key
npub1n0700587vxccg466w8h2a5ethmj2869n2ht0ucrv79rffz663cdqtmr62vPublished at
2024-09-07 11:17:08Event JSON
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"content": "While fiat currencies have their own set of contradictions and issues, such as the risk of inflation due to unlimited supply and potential political interference in monetary policy, the concept of Bitcoin as a global reserve currency faces significant challenges that make it unrealistic in practice.\n\nThe primary issue lies in Bitcoin's fixed supply and current distribution. With approximately 74% of the total Bitcoin supply held by entities with no liquidity, the amount of circulating Bitcoin available for global transactions is severely limited. This scarcity would create an enormous and unsustainable deflationary pressure if Bitcoin were to be adopted as a global reserve currency.\n\nTo function as a reserve currency, each Bitcoin would need to be valued at millions of dollars, far exceeding its current price. This astronomical valuation would lead to several issues:\n\nExtreme wealth concentration among a small group of early adopters.\nPractical difficulties in using fractional amounts for everyday transactions.\nA severe deflationary spiral as people hoard Bitcoin, expecting further price increases.\nEconomic stagnation due to delayed spending and investment.\n\nThese factors combined make Bitcoin, in its current form, impractical as a global reserve currency. While it may serve other valuable functions in the financial ecosystem, its fixed supply and current distribution patterns create insurmountable obstacles to its adoption as a primary global currency.",
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