Can Bitcoin Become the Next Global Reserve Currency?
In early 2007, Satoshi Nakamoto started working on an open source electronic payment system that would be completely decentralized and free from a central server or trusted parties. No one knows the real identity of Satoshi Nakamoto. But what we do know is that he (or she, or them) wrote the Bitcoin white paper to serve as a better alternative to fiat money. He published the original Bitcoin white paper in 2008. However, Bitcoin officially launched on January 3, 2009, when its software was ready.
Satoshi’s assertion with fiat money is the confidence to make it work. On its public web page, Satoshi wrote: “The root of the problem with conventional money is all the trust that is needed to make it work. We must trust the central bank not to depreciate the currency, but the history of fiat currencies is full of attacks on this confidence. Bitcoin therefore exists to eliminate third-party intermediaries like banks and online payment systems in financial transactions.
Transparent and secure transactions like this will definitely disrupt the financial industry as we know it. So comes the big question: Can Bitcoin become the next global reserve currency? To give a correct answer, we must first understand what Bitcoin is and how it works.
How Bitcoin Works
Unlike conventional fiat currency, Bitcoin does not have a physical form. All Bitcoin balances exist on a public ledger accessible to users around the world. No one owns or regulates this public ledger, not even the inventor. The transactions that occur in the general ledger are verified by enormous computing power.
One of the fundamental elements of Bitcoin transactions is the digital signature. Bitcoin uses an Elliptical Curve Digital Signature Algorithm (ECDSA) to sign transactions and send Bitcoins. You can generate this signature using your private key; Then you can use it to prove that you own the private key without having to reveal it. After that, you can transfer your Bitcoin as payment to another user via their public key.
Once a transaction has been signed, neither the sender nor the recipient can modify it. Therefore, Bitcoin works well for securing the ownership of assets. What makes it even more secure is that creating a digital signature is an offline procedure; therefore, there is no cybersecurity risk associated with their use.
3 reasons why Bitcoin will become the next global currency reserve
Can Bitcoin Become the Next Global Reserve Currency? While there is speculation surrounding this question, here are four reasons Bitcoin has a high chance of success.
Increase merchant acceptance
Bitcoin is now a globally recognized means of payment for tangible and intangible goods. Giant companies like Microsoft, AT&T, and Etsy accept Bitcoin as a valid payment method. But that’s not all. Major electronic payment systems like Stripe and Uphold already offer a Bitcoin payment option on their platforms.
A 2020 survey by HSB reveals that 36% of small and medium-sized businesses in the United States accept Bitcoin for payments. Ecommerce providers can easily incorporate Bitcoin into their daily business transactions by adding it as a payment option. Brick and mortar stores are not left out either. Many local stores now accept BTC payments through hardware terminals, wallet addresses, and touchscreen apps.
The emergence of supporting technologies
The rise of supporting technologies is another reason that portends a bright future for Bitcoin as the next global currency reserve. As the world increasingly relies on Bitcoin for day-to-day transactions, more billions of institutional, retail, and venture capital funds are entering Bitcoin’s network. And with a processing speed of seven transactions per second and a confirmation time of 15 minutes, congestion problems are inevitable.
But thanks to innovations like Lightning Network and Bitcoin Cash, Bitcoin’s network speed is only one step away from exceeding our expectations. The Lightning Network is a second layer of the Bitcoin Blockchain that allows multiple payment channels between Bitcoin users. Without Lightning Network, you would pay higher transaction fees and have to wait hours before validation.
Bitcoin is largely transparent
The biggest advantage of Bitcoin over fiat currency is the ability to create a completely transparent trading system. All Bitcoin transactions are public and easy to follow. Anyone can see the records and balances of transactions on the Bitcoin Blockchain.
The transparency of blockchain systems makes them applicable across different borders: elections, healthcare, and educational databases.
There is a famous saying: “First they ignore you, then they laugh at you, then they fight you, then you win.” This saying applies to the world’s most expensive currency, Bitcoin.
Bitcoin has become the main cryptocurrency and blockchain platform. He survived heavy criticism and political assaults. Its actual applications prove to be of immense value in day-to-day business operations. If you want to see more crypto updates like this. Check out Invezz for more ideas.