Can Bitcoin Solve Debt Problems?
Are you wondering if Bitcoin can solve debt problems? Here is a guide on whether this digital money can solve debt problems.
The world moved into the age of debt in the last 50 years. For instance, over the past 20 years, debt has increased by 394%, while wealth has increased by 1335. The discrepancy is integrally essential as we enter the age of dealing with debt. That is right. After spending 50 years building up a massive amount of debt around the globe, we are now moving into the age where we have to deal with huge piles of interest-bearing assets. On the other hand, if you are thinking about earning using bitcoin, then you may check efficient and reliable platforms like bitcoin motion
On the other hand, one possible solution to the debt problem is this digital currency. However, how can this virtual currency solve the debt problem? Below are two assumptions that underline the premise that this digital currency could help solve the world’s debt problem.
Assumption 1
First, this virtual currency has a hard limit cap of 21 million Bitcoins. This hard limit ensures that no government, financial institution, or individual can manipulate this digital money. The fixed supply is the gold of this electronic money which is outside the control of anyone. By improving this virtual currency to a moderately growing demand, its creators created a stable currency incapable of manipulating the inflation or deflation rates.
If the world shifted towards this virtual asset as their currency of choice, demand for government-issued conventional currency would decline. This electronic money would replace the US dollar and other currencies as the ultimate store of value. With governments having to issue debt in this digital money rather than their own money, there would undoubtedly be less debt and a lower risk of default.
Assumption 2
The second most critical assumption is that this digital currency continues on a technological improvement agenda to where this digital currency could handle the world’s transactions. It is not an easy technical task. Currently, the world’s central banks complete many of the world’s financial transactions.
Once the transaction problem is solved, this virtual asset can start cutting into the collaboration between governments and central banks. Slicing this connection would make this digital money the king of finance.
Decentralizing the Monetary System
The solution to the debt problem may be at hand. However, the economy must undergo a withdrawal first. Afterward, the government must implement an entirely new monetary system. This new financial system should have been envisioned by Satoshi Nakamoto ten years ago when he first created this virtual currency and hard-coded a clear message in the genesis blocks: Jan/2009 Chancellor was on the brink of the second banks’ bailout.
Nakamoto contemplated a system without a central bank at the core. Also, this system wouldn’t have a money-printing machine that a few would use to control many. Bitcoin presents a decentralized system that many manage with no single point of failure. Moreover, a deflationary system issues a fixed amount of funds without the abolition possibility. It’s an exciting prototype that might change how we think about wealth.
There is a lot to discuss regarding how the central bank attempts to stop these deflationary cycles by decreasing the cost of businesses borrowing money and adding newly-printed cash into the system. However, short-term solutions like this cannot work because the government cannot print currency without losing value. New money’s addition to the system transfers the wealth of the individuals in that society to a bleeding bank by decreasing the entire society’s spending power.
Final Thoughts
In looking at the potential for Bitcoin to help solve the world’s debt problem, individuals must develop their trust in this virtual currency more than they do in central governments. Also, Bitcoin must solve the technological problem of handling many trillion more of the world’s transactions every day.
