Can Bitcoin officially become currency of defaulted countries?
Before jumping into whether Bitcoin can or cannot become the currency of defaulted countries, we need to understand some terms. Firstly, What is a defaulted country? Countries can often default into debt. This simple means that a state is unable or unwilling to pay interest or principle on a loan. The country fails to keep up with the regulations of debt repayment.
Now, how is bitcoin related to this? Bitcoin is a cryptocurrency that is being quite widely used. It is a digital asset that vendors used to pay and receive payments especially in tech industry. It has experienced exponential growth in the past few years. This is because Bitcoins allow cheap and easier online payments without you having to run to the bank.
Can Bitcoin become a Major Reserve Currency?
The question arises if Bitcoin can make it’s place in the top reserve currencies. According to a UK financial institution, Magister Advises’ research, this might just happen. The research revealed that Bitcoin will be amongst the six largest reserve currencies by 2030. Since it’s release in 2009, a lot of companies have started using it as their digital currency. Even investors are becoming more optimistic towards bitcoin usage.
Multi-billion dollar companies have adopted blockchain technology too. In the fields of technology and finance, bitcoin is becoming increasingly popular. Outperforming all other currencies, Bitcoin has exceeded a market cap of $70 billion.
Adoption of Bitcoin as an International Currency
Asia has been the hub of bitcoin exchange and adoption. Industrial giants like CME Group of Japan have also become a part of Bitcoin exchange market. Moreover, KakaoTalk, the most famous messaging app in Korean recently invested in Philippine’s remittance service which is based on Bitcoins. The legalization of Bitcoin to be used as remittance in these countries brought about this development. Asian companies are aiming to provide better and sufficient administered platforms for Bitcoin users.
Even international companies like Tesla, Microsoft and Dell are now dealing in Bitcoins. Smaller companies are also jumping the wagon. In some places, you can even buy commodities or order food and pay through bitcoins.
How is Bitcoin like other currencies?
Though it is digital, bitcoin is like other currencies in many ways. Firstly, since it is online, it can be hacked and stolen. Similarly, your bank notes are also subject to theft. Just like a bank issues bills or notes, Bitcoin also issues coins. Miners produce these coins digitally. There is steady number of coins being produced since mining is hard. This ensures that there is a balance in production and regulation of the cryptocurrency.
Is it possible for Bitcoin to become the currency of Defaulted Countries?
It is not entirely impossible. However, Bitcoin has to go through a lot of steps for this to happen. Since it is not regulated by the government like other currencies, people tend to mistrust it. Furthermore, it is not involved in exchange. Recently, US regulators rejected the proposal, Bitcoin Exchange Trading Fund, for it to be included in exchange.
For it to become a mainstream currency, Bitcoin will have to tackle the issues regarding scalability. For this, wallet platforms have to integrate SegWit. Also, Segwit-enabled payments must also be supported by larger platforms. This will decrease the transaction fees, attracting more and more users. According to Jeremy Millar, a financial advisor, “Bitcoin has proven itself as an established currency. Blockchain, more fundamentally, will become the default global standard distributed ledger for financial transactions,”
Thus, it is possible for Bitcoin to become the currency of defaulted countries. However, it will require quite a long time and plenty of changes in the transaction and payments methods that are being employed today before it happens.