Bitcoin Constitutes All Necessary Features of a Reserve Asset as Compared to the US Dollar and Gold

In retaining reserve value and inflation’s control, Bitcoin is far better than fiat currency. According to a rough estimation, inflation in fiat can vaporize 90% of your savings in 100 years.

According to Michael Saylor, the founder of MicroStrategy, you could lose a major portion of savings in banks in 100 years due to inflation and counterparty risks. Counterparty risk occurs when a bank institution fails, which is normally happened over a timeframe of 100 years.

Fiat Currency is Vulnerable to High Inflation

Out of all reserve assets, fiat currency is the only which is vulnerable to high inflation. For instance, the world’s famous reserve currency, the US dollar, loses purchasing power (2%) every year. Real estate also looks charming for investors in the long-term but it is also vulnerable to various risks such as government taxes, public governance, and strict regulations.

Stocks, on the other hand, are also unpredicted over a course of 100 years. Companies and firms launch in the industry with an aim to present in the market for a long time but it is very unnatural that a company remains successful over 100 years.

Precious metals, such as gold and silver, remained very popular among the investors, and still, the market cap of gold reaches trillions of dollars. But there are many examples when gold is manipulated by dominant or illicit actors. For instance, gold was stolen at a large scale by non-state actors during World War II. At the time of the Communist revolution, the government took control of the publicly owned gold.

Best Reserve Asset

Based on the features of the best reserve asset, Bitcoin can be used due to its inflation-protected nature. The credit goes to its limited supply of 21 million and the underlying technology called blockchain that cannot be manipulated or changed in any case.

Institutional holdings have grown significantly as institutional investors now hold 3.6% of the total Bitcoin’s supply. According to the calculated data, 13 finance companies are having ownership of 600,000 Bitcoin worth almost $6.9 billion. For instance, MicroStrategy comes at the top position with holding 38,250 Bitcoin (approximately $450 million).

 

 

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