Bitcoin Replacing the US Dollar as the Leading Global Currency…MMM…Well…

My sincere apologies, but the authority of logic mandates my departing from the current social etiquette of unfaltering empathy and geniality, and farther still from political correctness; for this ad nauseam speculation, assumption, theory, or whatever you wish to call it, is altogether absurd and utterly idiotic. 

 

Imbecile could not be more proud!

 

Question: Would any speculator or theorist grace us with the economic, financial, or political rationale behind such grand monetary theory? Furthermore, could they furnish any hypothetical—much less empirical—evidence to substantiate their claim?

 

Noted! A global wave of enthusiasm for cryptocurrencies does exist, along with lucrative investment potentials. Insofar, however, those currencies continue to circulate among individuals; and, have not as of yet made their advent into the corporeal economic production cycles of physical goods; with no signs of manifesting such an evolution in the near future; they have no impact, absolutely none, on any country’s Gross Domestic Product (GDP)—i.e. the key indicator for a country’s economic health. One should also heed the fact that their aggregate value falls ridiculously short from covering the size—in terms of monetary value—of any of the world’s top five leading economies. 

A great many aspects of financial and political considerations are shared across— intertwined and overlapped in—the international financial and international political systems. Nonetheless, for the sake of brevity, only the most crucial one would be herein attended—that is, the United States national debt and its international financial and political implications. 

The United States current national debt is north of $28 trillion (Patton, 2021); of which $1.24 trillion, $1.1 trillion, and $443.2 billion are owned by Japan, China, and the United Kingdom, respectively (Duffin, 2021). Should Bitcoin—or, cryptocurrencies in general—enter interstates transactions as method of payment [emphasis added], what impact would that have on the US national debt, and how does it affect major debt-holders’ investment value in US treasury securities?

To answer this question, one must count with the following fact: 

Obviously, the market value at which Bitcoins are traded exponentially surpasses the cost of their farming,

“The Digiconomist’s Bitcoin Energy Consumption Index estimated that one Bitcoin transaction takes 1,544 kWh to complete…To put that into money terms, the average cost per kWh in the US is 13 cents. That means a Bitcoin transaction would generate more than $200 in energy bills,” (Gonzalez, 2021).

 At a premium, that is—notwithstanding that market forces could push them under that cost; in a word, the cryptocurrency market could crash (even shut down, for energy preservation and income-per capita-security purposes) if that scenario lasts for a month or longer (this is my own personal estimate); and, that would factor out the investment rationale in cryptos for the common investor; which in turn renders this whole discourse irrelevant—and that value is denominated in USD, yet has no corporeal economic foundation, nor representation, for its worth. As such, when Bitcoin, the leading cryptocurrency, circulates the international financial system as a universally accepted method of payment, we are basically bestowing upon non-economic fairy dust a real economic purchasing power. 

Having that said, the United States could practically pay-off portions of its national debt with, well, fairy dust. That is to say that debt-holders would be paid back their investment at a hideous discount rate with something that has absolutely no economically productive utility nor tangible representation. 

 

Moreover, how many countries around the globe have the energy capacity to farm cryptocurrencies sustainably, given the aforementioned energy consumption required per Bitcoin transaction? How many lack the infrastructure to produce and consume energy for such purposes? A considerable number of under-developed and developing countries are struggling till this very day to provide household electricity supply around the clock—notably, in the MENA region. 

As a result, those countries ability to conduct transactions in the international financial system would be drastically impaired, and that de facto imposes an irremediable restriction on their participation in international trade. Thereon, how are we to tackle such a dilemma? Ostracize those countries from the international economy, perhaps?

The inevitable conclusion thus follows: amplified global poverty, deprivation, and chaos.

 

In a nutshell, unless one among the ranks of those theorists is able to contemplate the means to persuade few great powers like China, Japan, and the UK to flush some hundreds of billions of dollars down the toilet—and, simultaneously convince the third world to become poorer and endure further deprivation—all the while beguiling the world’s leading economies to accept that fairy dust has an economic utility—this whole notion that Bitcoin would replace the US Dollar as the global currency remains entirely void to reason. 

 

Ultimately, the only world wherein that scenario could be rendered possible is a post-WWIII one. 

 

[NOTE: taking all that into consideration, in addition to the fact that even Donald Trump has got that right about Bitcoins, it would be reasonable to assume that I wouldn’t be sinning unpardonably for punching someone in the face for bringing-up that argument in front of me. Duly noted?! Good. ]

 

 

Reference

Duffin, Erin. “Major Foreign Holders of U.S. Treasury Securities 2021.” Statista, 2 June 2021, www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/.

Gonzalez, Oscar. “Here’s How Much Energy It Really Takes to Mine Bitcoin and Why People Are Concerned.” CNET, 14 June 2021, www.cnet.com/personal-finance/heres-how-much-energy-it-really-takes-to-mine-bitcoin-and-why-people-are-concerned/.

Patton, Mike. “U.S. National Debt Expected To Approach $89 Trillion By 2029.” Forbes, 3 May 2021, www.forbes.com/sites/mikepatton/2021/05/03/us-national-debt-expected-to-approach-89-trillion-by-2029/?sh=2d68fcb05f13. Accessed 27 June 2021.