Senior US politician Rand Paul, a Republican senator from Kentucky, has stated that he believes that it is possible that cryptocurrencies such as Bitcoin could replace the US Dollar as the world's reserve currency.
Paul made the statements while being interviewed for Axios on the HBO broadcast network.
Paul said:
"I've been amazed at the growth of it and I've always been, you know, more a person who believed that our currency should be backed by something of real value like gold or silver or commodities, and always was wondering well crypto is not backed by anything either."
"But here's what I've started to believe now is that the government currencies are so unreliable, they're also fiat currencies, they're not backed by anything. The dollar has been more stable than most other countries and so it is the reserve currency… I've started to question now whether or not cryptocurrency could actually become the reserve currency of the world as more and more people lose confidence in government. I guess I'm more concerned with government snooping into our private bank accounts, whether it's cryptocurrency or your bank account."
The US Dollar is widely accepted as the world's reserve currency. This means that it is widely accepted everywhere and is used to facilitate transactions, even those out with US territory and jurisdiction. This is also highly beneficial to the US as it gives the US economic advantages over other nations. However, the US Dollar is also not backed by anything other than faith, meaning it could be replaced as a global reserve currency should faith be lost in the currency, or a more reliable exchange tool becomes available, such as cryptocurrencies.
Cryptocurrencies, particularly Bitcoin, have gained in popularity in recent years, often used by criminals in order to carry out illegal exchanges. However, they are also seen as a potentially lucrative investment and many major businesses and financial institutions have now invested in crypto, including Tesla, who in 2021 bought over $1 billion worth of Bitcoin. These financial institutions and respected businesses investing heavily have greatly increased the respectability of the crypto-world.
[Based on reporting by: Market Watch]
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