So I just had a bit of an epiphany about bitcoin becoming the worlds monetary standard.

I love bitcoin but I always found it hard to believe it would one day become the worlds money because fiat and government control over the financial system are so imbedded. But as im watching Jim Rickards talk about CBDCs I had a realisation.

CBDCs are horrible but they will be forced upon us within this decade. They are not "cryptocurrencies", they are not "blockchains", CBDCs are simply centralised databases that will allow a synthetic digital dollar to be transferred from a consumer banking app to another consumer banking app whether thats a friend or a merchant or whatever. Its a digital balance transfer system between banks that a central bank has complete insight into and ultimate control over.

But if I have a digital dollar account and i want to send money to a merchant in china that has a digital yuan account it doesnt work because CBDCs are not global nor interoperable. There may be some blocs that create a unified CBDC on the same rails like BRICS or an IMF rail or something but even then its a botched segregated handful of systems making global commerce a mess. There is however still one politically neutral global value transfer system and thats bitcoin. So to send money from a digital dollar account to a digital yuan account there will be private sector services that use bitcoin as the transfer mechanism between CBDC systems to assist global commerce and interoperability.

Heres the thing. Whatever is used as the transfer mechanism becomes the money. We had gold, we traded gold, gold was money, but then we created paper currency as the way to make gold easier to use over long distances. Gold would be turned to paper currency and moved around the country then turned back to gold at its destination in the same way CBDCs will be turned to bitcoin sent overseas and turned back into CBDCs at the destination. But because the transfer mechanism has greater utility to transfer value people stop holding the thing considered money and just hold the transfer mechanism medium.

So this natural law essentially means even people who dont like bitcoin and think CBDCs are real money will end up holding bitcoin over CBDCs just because of its transfer mechanism utility. The biggest thing being that bitcoin is not just a more convenient transfer mechanism it is actually a more sound form of money than CBDCs.

There will be some that hold bitcoin because of its sound monetary characteristics and others who end up holding and using it just because of its transfer mechanism utility and these two forces combined will lead the free market to converge solely on bitcoin and discard CBDCs just as easily as people started using paper currency and forgot about gold.

Add to this the fact bitcoin is the only option as the worlds reference currency for trade long term as its the only politically neutral money and its so easy to see that there are a multitude of forces at play that all lead to the same eventuality of bitcoin naturally becoming the worlds global monetary system and reserve currency.

The bitcoin standard becoming a reality is something not even CBDCs will be able to prevent.

Submitted February 12, 2023 at 03:34PM by slvbtc https://ift.tt/dRuGbVa