Morgan Stanley Investment Management’s chief global strategist and head of emerging markets, Ruchir Sharma believes Bitcoin will replace the U.S. dollar and become the world’s reserve currency.
The Indian investor revealed recently that when the coronavirus pandemic hit, the U.S. dollar had been the world’s “reserve currency,” for 100 years and that previous reserve currencies have had a 94 year shelf life on average.
“That would have been reason to question how much longer it could continue, but for one caveat: the lack of a successor,” he remarked.
“US officials were thus confident that, in response to the Covid-19 lockdowns, they could print the dollar in limitless quantities without undermining its reserve currency status, allowing the country to keep running large deficits without apparent consequences,” he continued;
But a new class of contenders is emerging: cryptocurrencies … cryptocurrencies such as bitcoin are being pitched by their champions as decentralised, democratic alternatives.
Sharma also pointed out, “many people have bought bitcoin in bulk,” because they are scared that central banks led by the US Federal Reserve are debasing the value of their currencies.
The price of Bitcoin has more than quadrupled since March, making it one of the hottest investments of the past year.
U.S. debts to the rest of the world surpassed 50% of its economic output last year, which could signal a coming crisis and the US government has continued to borrow under lockdown.
“The dollar’s reign is likely to end when the rest of the world starts losing confidence that the US can keep paying its bills. That is how dominant currencies fell in the past,” the strategist believes.
Bitcoin is also starting to make progress on its ambition to replace the dollar as a medium of exchange … Money printing is likely to continue, even when the pandemic passes. Trusted or not, bitcoin will gain from widening distrust in the traditional alternatives.
Shares also aslo cited the fact that Paypal are allowing 28 million merchants to accept bitcoin next year.
He left central banks with a startling warning,
Do not assume that your traditional currencies are the only stores of value, or mediums of exchange, that people will ever trust. Tech-savvy people are not likely to stop looking for alternatives, until they find or invent one.