Whether or not cryptocurrency will replace the US dollar for international transactions in the future has been a popular topic for debate in recent times. Crypto has become a buzzword of the new age economy and is not defined by national boundaries, and hence many think that it can become a currency for international transactions over the next 10 years.
An experienced professional in the finance industry, Kavan Choksi mentions that at the moment, judicial systems, governments, and central banks across the world are still trying to figure out the right regulations and norms for crypto. Hence, more awareness about this digital currency is needed before it can be considered for international trade.
Kavan Choksi talks about the odds of crypto replacing the US dollar for international trade
The US dollar is considered to be a largely stable and trusted currency across the world. It is the reserve currency for the world, and hence supports international transactions and all aspects of the global economy. Now the question arises that whether it will continue to hold that position, or whether there is a chance of Bitcoin or another cryptocurrency eventually replaces in the long run.
The ways to use cryptocurrency are many, depending on one region to another other. It is basically a form of payment that is used to buy a service or a product online. Unlike cash in hand, the value of crypto is exhibited in units directly referring to the digital medium. It is pretty easy to identify the figure and value of money that a digital currency holds. For instance, one may say they have 4.5 Bitcoin while talking about the dollar’s amount. Many companies across the world have launched their specific digital currency, and their accessibility tends to vary for each country. For many, cryptocurrency has emerged as a highly convenient means for making purchases in comparison to other options. The confidentiality of ownership is pretty high in the case of cryptocurrency. At a country level, it allows people to bank their savings without being dependent on the US dollar.
Today crypto has become pretty popular in many parts of the world, including the United States. Crypto enthusiasts come in many forms, starting from powerful politicians to college students. Many of them truly believe that crypto is the new way of paying for goods and services throughout the entire globe. Kavan Choksi, however, mentions that everything is not that simple when dealing with cryptocurrency. This digital currency comes with very specific risks, such as hacking, scamming, and so on. Cryptocurrency is not actually money and lacks practicality. Its inherent volatility makes crypto an unreliable store of value. Banks planning to experiment with such new technologies must do so only in a controlled and limited manner, as of now.
To sum it up, while undoubtedly cryptocurrency is a game changer, it is unlikely to replace the US dollar in the near future. While in the long term, anything is possible, more security and awareness in regard to crypto are needed to make it feasible for international trade.