D23 Can Bitcoin replace the US dollar?
Can Bitcoin Replace the US Dollar?\n\nWe must first start with what is the definition of money and does Bitcoin meet this definition?\n\nTo understand if Bitcoin is a viable replacement for money one must understand the definition of money and test it to see it meets the definition. \n\nMany people don't know the reason why Bitcoin was created. \n\nBitcoin was created as a result of the financial crisis of 2008-2009. It was created with the goal in place to replace fiat currency. \n\nMillions of people believe that Bitcoin is a viable alternative for a storehold of wealth. \n\nBut the question is does Bitcoin meet the definition of money?\n\nWhat is the definition of money?\n\nDoes it meet these three characteristics?\n\nStore of value \nUnit of account \nMedium of exchange \n\nInvestors should ask what is their logic for investing in digital assets.\n\nThey should ask if they seek a substitute for money or do they seek to diversify their portfolio by adding Bitcoin as an investment. \n\nDecide if your going to use one approach or both. \n\nThe approach determines the type of digital asset you should invest or store your wealth in. \n\nThe money test is not the only test people should do. \n\nThey should also know if Bitcoin meets the currency test. \n\nThey should understand what the asset does for their diversification needs. \n\nIs adding Bitcoin improving diversification by producing better risk adjusted returns?\n\nIn a simplified way, digital assets can be seen as an asset class or as an alternative storehold of wealth. \n\nThese two approaches require different implementation strategies and financial planning approaches. \n\nRegardless of which approach you you still need proper financial planning and risk management strategies. \n\nIt's fascinating that by just looking at the definition of money it appears that Bitcoin meets the definition. \n\nAcceptability is still a challenge for Bitcoin but the store of value seems to be appealing due to the logistics of supply and demand. \n\nBitcoin and digital assets are fascinating. Can Bitcoin replace fiat currency? I don't know. But it is possible when you focus on the definition of money and the fact that we are moving towards a fully integrated digital world. \n\nLast, it's hard to argue against the money supply and demand issues that many governments place on their central currencies. \n\n\n\n--- \n\nSend in a voice message: https://podcasters.spotify.com/pod/show/joesotoproject/message