In a recent 108 page report published by Citi GPS: Global Perspectives & Solutions (the premier thought leadership product from Citi), they put forward the notion that Bitcoin is “At the Tipping Point”. Having moved from a relatively useless vehicle for retail exchange in its early days to “digital gold” being held as an investment vehicle by investors, institutions and companies alike and more recently leveraged as a cash reserve by companies like Microstrategy. But the more interesting notion Citi GPS put forward was that because it is a finite asset, has undeniably growing wide-spread acceptance, lacks exposure to foreign exchange and is decentralized at its core – it is becoming (or may be there already) an ideal currency for international/global trade.
The international trade currency, since World War II, has been the United States dollar. At the time, backed by gold reserves and the relative influence of the US economy, it made sense. There really wasn’t anything else. But in 1976, the gold standard was unwound by the Carter administration. And now – increasingly the US government is spending money it doesn’t have. The US national debt stands at over $28 Trillion dollars. This is 130% of our Gross Domestic Product meaning our total economic activity in a given year is less than our national debt. There is also no “reserve” aligned to the amount of dollars in circulation. Is our dollar still worth what it was? As the US prints more money, the value of the dollar has to fall.
Bitcoin has no such baggage. It literally has become “Digital Gold”. Demand has skyrocketed for Bitcoin with its price increasing as a result nearly 1000% over the past year! The supply is finite and becoming easier to trade all the time and traders need not worry about foriegn exchange costs. Exchanging cryptocurrency is near real-time and potentially cheaper than other forms of exchange (think Paypal, Visa, etc.) where transaction fees are upwards of 3%. If some predictions are to be believed, expect the ease of trading Bitcoin to skyrocket in 2021 as major players in payment mechanisms start to climb on board. Further, Bitcoin is already borderless – decentralized by its very nature.
What seems like a bold prediction by Citi GPS, really looks like a natural evolution as Bitcoin continues to gain acceptance and value.