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Author Topic: If bitcoin becomes world's reserve currency?  (Read 2894 times)
jbreher
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May 29, 2014, 05:58:58 PM
 #21

Watched a video of Jim Rickards being questioned by the editor of Reason magazine last night. He claimed that, in Jan 2011, the IMF drew up a ten-year plan to replace the USD with the IMF's SDR (special drawing right) as the reserve currency and currency of international settlements. The SDR is just one more fiat currency backed by nothing.

A little over three years into the plan, (again according to Rickards), the world's financial ministers are regularly progressing towards this end, discussing it along with the more mundane things that occur at their meetings.

I would prefer bitcoin take that mantle. But either way, looks like the USD's days are numbered.

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May 29, 2014, 06:06:38 PM
 #22

Watched a video of Jim Rickards being questioned by the editor of Reason magazine last night. He claimed that, in Jan 2011, the IMF drew up a ten-year plan to replace the USD with the IMF's SDR (special drawing right) as the reserve currency and currency of international settlements. The SDR is just one more fiat currency backed by nothing.

A little over three years into the plan, (again according to Rickards), the world's financial ministers are regularly progressing towards this end, discussing it along with the more mundane things that occur at their meetings.

I would prefer bitcoin take that mantle. But either way, looks like the USD's days are numbered.

The American people are naive and spoiled for sure but they would never accept the IMF controlling currency. That might be the thing that drives main stream Americans into bit coin.

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May 29, 2014, 06:14:24 PM
 #23

But either way, looks like the USD's days are numbered.

All reserve currencies eventually are replaced and it always because the entity printing the reserve currency abuses that special status.  The dollar being the reserve currency means that other countries are defacto obligated to continually hold large sums of dollars.  To partially hedge those holdings they usually buy US debt (interest offsets inflation losses).  As long as the nations of the planet trust the reserve minter to not excessively devalue those holdings then the system "works".    Generally it works fine for 50 to 150 years depending on the restraint of the minter.  It does however distort the free market pricing of debt.  Since foreign nations collectively need to hold trillions of dollars in US debt it drives interest rates on that debt down and subsidizes the US government to spend spend spend.  I mean it is almost free money so what is a hundred billion here and a trillion there.  The US govt "wins" and everyone else "loses" and the more debt the US govt racks up the more likely a default is too occur (of the treasury just hyperinflation that debt away to avoid an official debt).  That leads to resentment and eventually a new currency is used but the process will repeat itself.  The US wasn't the first and it won't be the last.  It works as long as you trust governments to spend within their means and not abuse that special status. Smiley

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May 29, 2014, 06:21:23 PM
 #24

The American people are naive and spoiled for sure but they would never accept the IMF controlling currency. That might be the thing that drives main stream Americans into bit coin.

The IMF wouldn't control or replace the dollar.  Under that plan (which I think is unlikely to happen) the SDR would replace the dollar as the reserve currency of the world.  For most of the history of this country the US dollar wasn't the world's reserve currency.
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May 29, 2014, 07:20:10 PM
 #25

If the bitcoin (BTC!) becomes the world reserve currency, then banks will long have adopted it. They will have scared people because of security issues when holding BTC by themselves and they will have made people deposit and transact via the banks, which in turn allows the banks to work with IOUs instead of actual BTC.
This will result in the ability to massively inflate said IOUs by just issuing more of them as debt which will have to be repaid (plus a little extra). For this to not get out of hand an institution will be appointed bitcoin reserve bank and it will be able to control the creation of said IOUs on a pace they like.
As a result, the rich will get richer and the poor will suffer.

The value of a bitcoin by then? A lot less than now because it has been massively inflated with trillions of bitcoin IOUs everyone is forced to accept as settlement of debt.

i doubt that would happen.

people would start demanding provable solvency.  that's already started in fact.
no one had that option before, but since the blockchain is transparent,
i think it will quickly become the norm.   

plus there's no need to have the IOU system with clearing houses, etc.
its no longer a debt based system -- you own the asset when you own a coin.

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May 29, 2014, 07:52:20 PM
 #26

People who have a lot of bitcoin would be rewarded for their foresight. Any one could try to be an early adopter of bitcoin right now, but most don't, because they don't believe the cost is worth the chance that it will become a more widely accepted currency.
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May 29, 2014, 07:58:41 PM
 #27

Those that risk their money by investing deserve any capital gains that would come if bitcoin does end up being big, just like they would deserve any losses they would face if it doesn't.
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May 29, 2014, 08:04:58 PM
 #28

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.
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May 29, 2014, 08:05:08 PM
 #29

More importantly, early adopters would only be able to spend their wealth once. Money continually circulates, so in the long run it is those able to earn a lot on a continuous basis that can spend the most, not those who have a lot of currency at one point in time.
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May 29, 2014, 08:11:12 PM
 #30

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.

perhaps.

but 5 years ago, if when Satoshi's white paper came out, and I said:
in a few short years, tens of thousands of merchants will accept
bitcoins and a single coin will be $600... you could have said
its a deluded pipedream and be just as plausible, if not more so.

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May 29, 2014, 08:11:25 PM
 #31

Real wealth is much more than just money. Just like now, the wealthiest people in the world would be those with most non-cash assets.
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May 29, 2014, 08:13:25 PM
 #32

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.

perhaps.

but 5 years ago, if when Satoshi's white paper came out, and I said:
in a few short years, tens of thousands of merchants will accept
bitcoins and a single coin will be $600... you could have said
its a deluded pipedream and be just as plausible, if not more so.

you are comparing apples to oranges. it's more believable that bitcoin would become big, than it is to believe that countries all over the world will adopt bitcoin as its currency. it's just bitcoin fanboys dreaming of their btc being atop the mountain. there's just no way world governments would just relent their grip on currency reserves.. what, you think the people in high seats are such altruistic people that they'd let it slip?
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May 29, 2014, 09:25:18 PM
 #33

When that happens Bitcoin will value at least $100K.
But, I doubt the US dollar will get replaced. The US dollar is still there but we're hoping Bitcoin will be more open to use as a global currency within the next few years Smiley
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May 29, 2014, 09:42:04 PM
 #34

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.

perhaps.

but 5 years ago, if when Satoshi's white paper came out, and I said:
in a few short years, tens of thousands of merchants will accept
bitcoins and a single coin will be $600... you could have said
its a deluded pipedream and be just as plausible, if not more so.

I actually think the hardest part of BTC (or CC's) has been done. The orders of magnitude it had to rise to get here are more than it has to go to 100K or even 1M.

eg 5~10e^6 since first listing, only 10~20e^2 for 100K and 10~20e^3 for 1M.

although the 1000-->9000 in absolute value is 10x more. Still its hard to argue that BTC is not still on a log graph growth.

reserve currency, well it would be a better reserve currency than any alternatives except for its POW. A POS currency and at this stage PeerCoin is going to be that. PeerCoins attributes are far better suited for reserve usage than BTC.

At some point BTC is going to have to fork to POS or POS/POW of some type.

The whole mining tax just makes it uneconomic vs pos / pow or pure pow, not to mention the drama of mining.

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May 29, 2014, 09:44:36 PM
 #35

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.

perhaps.

but 5 years ago, if when Satoshi's white paper came out, and I said:
in a few short years, tens of thousands of merchants will accept
bitcoins and a single coin will be $600... you could have said
its a deluded pipedream and be just as plausible, if not more so.

you are comparing apples to oranges. it's more believable that bitcoin would become big, than it is to believe that countries all over the world will adopt bitcoin as its currency. it's just bitcoin fanboys dreaming of their btc being atop the mountain. there's just no way world governments would just relent their grip on currency reserves.. what, you think the people in high seats are such altruistic people that they'd let it slip?

the people will just start using it as they cotton on that they can have their wealth inflated away, confiscated subject to capital restrictions, tracked, subject to insane judical systems and laws, inefficient taxation.

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jonald_fyookball
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May 29, 2014, 09:59:49 PM
 #36

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.

perhaps.

but 5 years ago, if when Satoshi's white paper came out, and I said:
in a few short years, tens of thousands of merchants will accept
bitcoins and a single coin will be $600... you could have said
its a deluded pipedream and be just as plausible, if not more so.

I actually think the hardest part of BTC (or CC's) has been done. The orders of magnitude it had to rise to get here are more than it has to go to 100K or even 1M.

eg 5~10e^6 since first listing, only 10~20e^2 for 100K and 10~20e^3 for 1M.

although the 1000-->9000 in absolute value is 10x more. Still its hard to argue that BTC is not still on a log graph growth.

reserve currency, well it would be a better reserve currency than any alternatives except for its POW. A POS currency and at this stage PeerCoin is going to be that. PeerCoins attributes are far better suited for reserve usage than BTC.

At some point BTC is going to have to fork to POS or POS/POW of some type.

The whole mining tax just makes it uneconomic vs pos / pow or pure pow, not to mention the drama of mining.

Not necessarily.  Look at how much money changes hands every block.  There's reason to believe bit coin will be big enough so that  a small mining fee of 0.1% will provide ample security.


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May 29, 2014, 10:07:29 PM
 #37

this scenario is just a deluded pipedream. i am willing to bet everything that i have that bitcoin will not become a world reserve currency.

perhaps.

but 5 years ago, if when Satoshi's white paper came out, and I said:
in a few short years, tens of thousands of merchants will accept
bitcoins and a single coin will be $600... you could have said
its a deluded pipedream and be just as plausible, if not more so.

I actually think the hardest part of BTC (or CC's) has been done. The orders of magnitude it had to rise to get here are more than it has to go to 100K or even 1M.

eg 5~10e^6 since first listing, only 10~20e^2 for 100K and 10~20e^3 for 1M.

although the 1000-->9000 in absolute value is 10x more. Still its hard to argue that BTC is not still on a log graph growth.

reserve currency, well it would be a better reserve currency than any alternatives except for its POW. A POS currency and at this stage PeerCoin is going to be that. PeerCoins attributes are far better suited for reserve usage than BTC.

At some point BTC is going to have to fork to POS or POS/POW of some type.

The whole mining tax just makes it uneconomic vs pos / pow or pure pow, not to mention the drama of mining.

Not necessarily.  Look at how much money changes hands every block.  There's reason to believe bit coin will be big enough so that  a small mining fee of 0.1% will provide ample security.



at that 0.1% of a large market is still a huge amount, which will be arbitraged out by a POS or POS/POW systems that offers the same security.

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May 29, 2014, 10:17:34 PM
 #38

not really sure what you mean.  how would you arbitrage across unconnected or different systems.

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May 29, 2014, 10:31:01 PM
 #39

Look at the chart DeathAndTaxes posted. Do you notice a trend? What did each reserve currency has in common? Being a reserve currency is all about trade. The largest economy who trades with the most countries in the world will be economically dominant, and it makes sense for other countries to keep that dominant currency as a reserve. Can bitcoin be that dominant currency? Not until we have huge bitcoin forex markets. I believe the Chinese Yuan is a more likely candidate for the next reserve currency.
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May 29, 2014, 11:36:39 PM
 #40

Expect it around 2020, 2025 on the outside.

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