The total cryptocurrency market managed to reach a market valuation of over $200 billion this year, and this has caught the attention of the entire finance world.
Could Bitcoin Replace the Dollar?
Cryptocurrencies were the clear winner of 2017. Major cryptocurrencies like Bitcoin, Ethereum and Litecoin have massively increased in value over the year, effectively outperforming investments like stocks, commodities, and bonds. The incredible performance of cryptocurrencies has given many skeptical people in the finance and business community more confidence in decentralized currencies.
In September 2017, Christine Lagarde, the Managing Director of the International Monetary Fund, stated that cryptocurrencies could potentially replace most fiat currencies in the future. The biggest finance and technology corporations are mostly focusing on the technology that powers most cryptocurrencies, the blockchain. Some experts believe that the blockchain technology could greatly benefit the traditional finance system, without having to completely replace it with Bitcoin.
Bypassing Sanctions with Cryptocurrencies
The finance and business communities aren’t the only ones that are closely watching cryptocurrency space. Several governments have shown interest in digital currencies and their underlying technology. The Estonian and Tunisian government have already experimented with their own fiat-based cryptocurrencies. The Russian government sees another use case for cryptocurrencies like Bitcoin. In the last couple of years, Russia has been under heavy financial sanctions from western countries. After Russia annexed Crimea, many politicians suggested banning Russia from accessing the international banking system, SWIFT.
Finance experts suggest that decentralized currencies like Bitcoin and Ethereum could greatly help countries that are under sanctions like Cuba, Russia, Iran and North Korea to transfer wealth internationally without having to rely on banks and financial institutions. Analysts believe that cryptocurrencies could gradually replace fiat currencies like the US dollar and potentially replace financial institutions in the future.
What are your thoughts on cryptocurrencies replacing the US dollar as world reserve currency? Do you think that governments and individuals could bypass sanctions and restrictions with digital currencies? Let us know in the comments below!
Images courtesy of Pixabay, Fortune.com
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