Analysts Predict That Bitcoin Can Replace Dollar As an International Currency in Future
The U.S Dollar no doubt has been one of the strongest currencies and has dominated the global trade now for decades. However, in the past 2-3 years, there has been a paradigm shift in the dynamics of global economics. A new form of virtual digital currencies, now famously known as cryptocurrencies, have gained immense popularity within the mainstream financial world.
The idea of cryptocurrencies resonates with a lot of people around the globe because of its inherent nature of operating in a completely decentralized manner. This means unlike fiat currencies, there is no intervention of government bodies and financial institutions like banks and the power of its control lies into the hands of investors spread across the globe. This means that is independent of any one particular country’s economy.
Having shown its strength in past one year, many analysts believe that Bitcoin can prove as a major alternative to the U.S Dollars and these possibilities are being largely considered by several oil producing nations.
The current scenario in the oil markets is that many of them are still dominated by U.S Dollar. Major oil producing nations like Russia, China and Venezuela have long been considering an alternative to the dominating dollar which can help them reduce their decency on the dollar and at the same time, it can limit their exposure to any possible sanctions imposed by the U.S government.
In his latest research note, Stephen Brennock, oil analyst at PVM Oil Associates wrote “The advent of cryptocurrencies, therefore, represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil”
However, many banks and financial institutions have repeatedly warned against this highly volatile cryptocurrency which has shown some rapid price swings over the period of time. This brings a huge question regarding the stability of the cryptocurrency and whether it can be considered as a store of value. Banks and many other financial institutions have outrightly denounced Bitcoin calling it as a speculative bubble which can burst anytime.
CBOE’s Bitcoin Futures contracts are to start from today followed by CME Group’s in the next on December 18. The launch of Bitcoin futures by these two largest exchanges is expected to bring some stability in bitcoin price and reduce the extreme volatility. Moreover, many other financial instruments are also expected to be built around Bitcoin by other institutions in the next year. Some analysts believe that this can provide a vote of confidence to the cryptocurrency.
Brennock said, “This should bolster the increasing popularity of cryptocurrencies; so much so that they may pose a threat to the role of the U.S. dollar as the world's reserve currency.”
With several Bitcoin investment products scheduled to launch in next year, Bitcoin price is expected to get more stability and whether it can be considered as a serious option for mainstream adoption.