Genesis
Response
Penultimate
Finale
January 27th, 2022
Bitcoin won't replace the US dollar, I'm not even sure why this is a question. But let's run down the list of some of the things that the US dollar does, and ask whether bitcoin can do them.
1) The dollar is the universal unit of account. If you ask the price of a barrel of oil, or 1 euro, or a megayacht, or a share of Apple stock, or even 1 bitcoin, the answer you get will invariably be some number of dollars. The dollar is the yardstick against which everything else is measured. If you want to know whether there's inflation, for instance, you look to whether prices in dollars are going up. Bitcoin just doesn't work as a unit of account. If it did, then we would be in a hyperinflationary period right now, after years of massive deflation. That just isn't the case.
2) The dollar is a key way that the US projects and consolidates its international power. It allows the US government to impose economic sanctions on anybody in the world; it gives the US significant revenues in the form of seignorage; it's the only currency that you are allowed to lend to the US government; and it's the only currency in which you are allowed to pay US taxes. Bitcoin won't replace the dollar in any of those ways.
3) The dollar is by far the world's most popular payments currency. You can easily use dollars, either physical or electronic, to pay for anything that's for sale in the US; it is also the currency that your paycheck is going to be denominated in. (Feel free to convert it to bitcoin; just know that your taxes are going to be payable in dollars.) Dollars are broadly accepted in many other countries too; it's even the sole legal currency of Ecuador. It makes sense for payments to take place in the same currency that you're using as a unit of account. So long as things are priced in dollars, they're going to be paid for with dollars. Almost nothing is priced in bitcoin, and almost nothing is regularly paid for with bitcoin, either. The dollar is even better than bitcoin for micropayments. If I want to give a dollar or less to a busker, that's easy. Try making a payment that small in bitcoin, however, and it's much harder.
Bitcoin won't replace the US dollar in any of these key aspects. It might have some edge-case utility. But the dollar itself is here to stay.
0 Comments
Follow Us
