Backing Fiat with Bitcoin...A possibility?

[wxa7115]

What if someday central banks like the FED and the ECB decide to back their currencies with Bitcoin? If the FED used to back the USD with Gold, then what's stopping them from doing the same with BTC?

Do you think this is a possibility? If not, why? What will happen to the global economy if major Fiat currencies are tied to the value of Bitcoin? Will it prosper?

Your input would be greatly appreciated. Thank you.

Anything is possible but I do not think of this possibility as being very likely, because even if we were to suppose that a massive crisis of confidence struck fiat currencies and governments had no other option but to back them with gold, silver or bitcoin, how long could this last?

On the countries in which this happened, just a few years later governments wanted to go back to their fiat currencies as they cannot live without printing as much money as they want anymore, so at best I could see this scenario lasting a few years tops.

[icalical]

What if someday central banks like the FED and the ECB decide to back their currencies with Bitcoin? If the FED used to back the USD with Gold, then what's stopping them from doing the same with BTC?

Do you think this is a possibility? If not, why? What will happen to the global economy if major Fiat currencies are tied to the value of Bitcoin? Will it prosper?

The thing that stopped them from doing that would be politics, central bank would need other countries to consider Bitcoin as a legitimate thing to backed a fiat, so their currency would be recognized by other countries, which in my opinion will be a very difficult obstacle. Bitcoin is not something that could be controlled by government and many government is not familiar with Bitcoin, and this will discourage them from using it to back a currency. Gold on the other hand, has been around forever and governments around the world know how it works.

[Poker Player]

Do you think this is a possibility?

This is one thing that I have commented on in other threads as a future possibility: just as central banks have gold reserves, they could have reserves of Bitcoin, which in practice is an enhanced digital gold. But if it happens will take time and also I think it will take a component that they almost have, which is a high degree of control of Bitcoin by the authorities through regulations and KYC obligation.

[MarjorieZimmermanGinger]

What if someday central banks like the FED and the ECB decide to back their currencies with Bitcoin? If the FED used to back the USD with Gold, then what's stopping them from doing the same with BTC?

Everyone may hope that this revolution will be carried out, but the problem is whether if it is carried out, the price of bitcoin will be as volatile as it is now? Bitcoin is more unique because it is able to stand alone and does not require support from government regulations because instead Bitcoin is trusted by individuals and groups. Of course there are only things that need to be considered, but if the nature does not change then this support could be carried out in the future because we never know what revolution will be carried out in the future.

Do you think this is a possibility? If not, why? What will happen to the global economy if major Fiat currencies are tied to the value of Bitcoin? Will it prosper?

It is possible that this could happen because the global economy may see bitcoin as an alternative global currency as a way of avoiding the impact of inflation or recession. But this is only my assumption because there is no power of reference that I can provide and maybe it will happen in the future.

[Abiky]

This is one thing that I have commented on in other threads as a future possibility: just as central banks have gold reserves, they could have reserves of Bitcoin, which in practice is an enhanced digital gold. But if it happens will take time and also I think it will take a component that they almost have, which is a high degree of control of Bitcoin by the authorities through regulations and KYC obligation.

ETFs just opened the door for mass accumulation by institutional investors. This, alongside the seizure of BTC from illicit activities (particularly by the US government), tells us that external forces will drive Bitcoin away from its intended purpose. Backing Fiat with BTC should be a no-brainer in the future. We're already seeing pro-Bitcoin politicians (Milei, Bukele, RFK Jr., etc), so anything's possible.

I'm yet to see if central banks are going to like this idea, especially when they use to "print money" to manipulate the economy (something which can't be done with Bitcoin). The future is widely unpredictable, so we can only hope for the best.