Could Bitcoin replace the U.S. dollar?

Riley Daniels, Staffer

Remember when Bitcoin took over the internet in 2017? Only a few days into 2021, it looks as if that might happen again. Currently, Bitcoin is the world’s largest cryptocurrency, costing around $33,000 per Bitcoin. After Bitcoin’s surge in 2017, it has been relatively quiet. It even fell to only $4000 during March and April, due to COVID. It reached back up to $10,000 in September, but still didn’t get any recognition. It passed $20,000 on December 16. 

Bitcoin had a great end of 2020, but it wasn’t until 2021 that Bitcoin broke records. In one day, Bitcoin gained 9 percent value. Its capitalization now exceeds $570 billion, meaning that all the Bitcoin in the world adds up to $570 billion.

Bitcoin is commonly known as the first cryptocurrency (online currency) ever created. During the Great Recession, in which the United States lost around two million jobs, mysterious Satoshi Nakomoto registered the domain name A year later, its first transaction took place. Another year later, it was hacked, resulting in a transaction of 184 billion BTC, equivalent to to $5.4 quadrillion today. 

There’s no doubt Bitcoin has the opportunity for a fantastic future. In only 11 years, Bitcoin’s value has risen from less than $1 to almost $40,000. But the debate is whether it will replace the U.S. Dollar. As Bitcoin’s value rises, the U.S. dollar continues to fall due to COVID. The Federal Reserve System is prioritizing low rates and handing out stimulus checks, lowering the dollar’s value and purchasing powers. This is similar to the stock market crash of 1970, where those who held onto real assets besides U.S. currency created a valuable investment strategy. 

However, it isn’t just Bitcoin that has been on the rise. Other currencies have soared as well. For example, cryptocurrencies Ethereum and Litecoin have tripled in value since the start of 2020. This is due to the increase of investment in the digital currency in established firms. In November, “Ruffer Investment Management,” which currently owns $27 billion in assets, purchased around $745 million in Bitcoin. A month prior, Paypal allowed customers to buy, hold, and sell cryptocurrency from their accounts. Along with strategic investment companies, famous celebrities and well-known figures have purchased BTC. The list goes on and on, from Bill Gates to Snoop Dogg. Although these celebrities don’t specialize in investment, they could popularize BTC, raising it’s value. This would be similar to a famous celebrity seen driving a newly released car. People would be interested in the car, raising its popularity and desire. 

Due to this support from Wall Street and big investors, Bitcoin has reached its highest value, beating its former 2017 record. Online currency is looking for a slew of development, including a highly anticipated launch of Facebook Bitcoin-inspired currency. Nicholas Pelecanos, head of trading at cryptocurrency firm NEM predicted Bitcoin to reach $50,000 by Valentines Day.

If other countries developed cryptocurrencies as well, many problems would be solved. All transaction costs related to international finance would be eliminated. This would also make trading with other countries easier. For example, since the European Union switched to using the Euro, trading amongst member nations grew by 20 percent. Lastly, developing countries would be introduced to a stable currency, forming a base of future economic development. It will be very difficult to replace the U.S. Dollar, which has held it’s value very well over a long period of time, but Bitcoin or another form of cryptocurrency could possibly serve as a backup currency for the government.