Is Bitcoin going to be used by the entire world?

This opinion editorial is by Nesrine Aissani (cofounder of Zonebitcoin). I was born in 1980 in Africa, in a country with a “non-convertible currency”. That was a way I saw “currency” in the 1980s. I felt it was wrong. This was also evident when I discovered Bitcoin, and how it allowed me to exchange currency internationally. This currency is also known as locked money. It has no value outside the country. The Indian rupee, for example, is a non-convertible currency that cannot be exchanged outside of India. However, dollars can be exchanged around the globe in most countries. Only 18 countries or regions will have a convertible currency by 2022. As you can see, many don’t. The non-convertibility and economic impact on people’s lives has concrete consequences. The need to exchange currency is what makes tourism a complicated business. This is to avoid capital flight abroad. Residents are “forced” into using the currency within the country by preventing conversion. The currency cannot be exported from the territory but it can be obtained through complex financial instruments like non-deliverable forwards. Some countries may be restricted from trading with other countries if a currency isn’t convertible. These partners are subject to additional administrative and financial complexities. A non-convertible currency is also in high demand, unless it has a competitive advantage on exports, or it is a highly-visited tourist destination. This weak demand will eventually lead to a currency depreciation. With each transaction, demand increases and strengthens its legitimacy.Therefore, it is clearly necessary — even essentia — and all the more so in the era of globalization to have a currency that everyone can use and refer to.Since the Bretton Woods agreement of 1944, it has been agreed that the U.S. dollar will be the reference currency in international trade. This is known as “exorbitant privilege”, as it gives the United States great advantages. People all over the globe are using bitcoin as a payment method. Many remote workers and freelancers now receive their bitcoin payments. Another example of its use is the sending of money to family members back home by migrants. This is especially true for countries with the lowest levels of bank ownership. Bitcoin provides financial infrastructure to entire countries, such as India, Africa, and Latin America. All you need is an internet connection and a phone to send money to someone else. This is why bitcoin is used as a universal currency. Some might argue that it is just as easy to send dollars. To understand the difficulty of opening a dollarized account, one must have lived in non-convertible countries. Since then, the idea for a single currency or a return of the gold standard has been brought back to the forefront. This idea is not new. John Mayard Keynes, a Bretton Woods spokesman, proposed the creation an international currency called “the bancor”, which would be fixed by a group of strong currencies from industrialized countries. Although his proposal was rejected, it has been carried on by generations of economists. For example, the IMF (International Monetary Fund), established special drawing rights (SDRs) in 1969. An SDR’s value is determined by a combination of major currencies. The SDR is not considered a currency in the traditional sense, but it serves as an international reserve currency. However, the SDR is very little known by the global population. It is used only by international organizations. What about the rest? What about businesses? What would be the benefits of a world currency? If there were no national currencies, foreign exchange market-based problems such as conversion fees and foreign exchange market-based problems would disappear. A world currency would remove any monetary barriers and allow countries to trade more freely. This would increase and improve international trade. All countries would benefit, particularly those with fragile currencies, as there would no more exchange risk. In addition, all countries would be treated equally under the global finance rules. China, for example, has been undervaluing its currency for years in order to make its export prices more competitive against other countries. A single global currency would make it impossible for China to manipulate its currency. Countries with weak currencies could reap the benefits of a stable currency. It would be a boon for many countries’ economic development. For example, countries as far away as El Salvador and Morocco could trade with Bitcoin. Locally, startups and businesses could be established in countries that are not connected to the rest of the globe. The use of bitcoin as an international currency could in some ways instantly align the world’s financial equity. The benefits of bitcoin as an international currency would be available to everyone. Some economists disagree with this idea. Robert Mundell, Nobel laureate, believes that “the optimal currency area” is not the entire world. This is because it would make it impossible for different monetary policies to be implemented. Because countries have different economic views, this could be beneficial and detrimental to other countries. However, Saifedean Anemous argues for a Bitcoin standard. He explains in his book “The Bitcoin Standard,” that bitcoin could offer the same benefits as gold in the history world trade. Bitcoin would have all the characteristics of “sound money” and would be the basis for a functioning economy that avoids recessions and debts. This system results in more losers than winners. The worst part is that it doesn’t seem to be improving. It seems that we are at the end. You can’t print money for ever. It is impossible to print money forever. These opinions are not necessarily those of Bitcoin Magazine or BTC Inc.

 

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