Billionaire tech investor Peter Thiel courted controversy recently by highlighting Bitcoin\u2019s potential in undermining the US dollar\u2019s position as a global reserve currency. Thiel shared his opinion in an online seminar about Big Tech and China held by the Richard Nixon Foundation on Tuesday 6 April, 2021. Here, KBS’s Dr Timothy King, an expert in cryptocurrency, gives his opinion on Thiel’s thought-provoking claims..\u00a0<\/p>\n
Paypal co-founder Peter Thiel\u00a0recently courted controversy by recommending Bitcoin be\u00a0viewed as a \u2018Chinese financial weapon\u2019 based on his assertion that it represents a threat to US global power. Clearly\u00a0this is controversial and calls for discussion.<\/p>\n
Given the decentralised nature of cryptocurrencies, it is difficult to argue credibly that Bitcoin is a tool created to deliberately destabilise the U.S dollar. Yet, of the less controversial claims made by Thiel, the suggestion that Bitcoin could displace the US dollar as the world\u2019s reserve currency is one that is interesting.<\/p>\n
Since the Bretton Woods Agreement of 1944 the US dollar has held the position of the world\u2019s reserve currency \u2013 even after the collapse of the\u00a0Bretton Woods System\u00a0in 1973.\u00a0So\u00a0could Bitcoin challenge the US dollars\u2019 position?\u00a0As is widely known,\u00a0Bitcoin is\u00a0differing fundamentally from currencies issued by centralised authorities (namely central banks)\u00a0since it is decentralised.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
‘Bitcoin will be increasingly important’<\/strong><\/h3>\n
Bitcoin\u00a0will\u00a0<\/span>be increasingly important <\/span>as<\/span>\u00a0means of payment and an alternative asset, there is no doubt about that,\u00a0<\/span>but it is unlikely to displace the\u00a0<\/span>US dollar\u00a0<\/span>as the world\u2019s reserve currency. <\/span>For Bitcoin to be considered fiat, a legal tender, it\u00a0should, as<\/span>\u00a0a minimum<\/span>,<\/span>\u00a0<\/span>be useful<\/span>\u00a0as a\u00a0<\/span>medium of exchange<\/span>\u00a0(i.e.\u00a0a means of\u00a0<\/span>payment), store of value (i.e.\u00a0the value of Bitcoin should hold its value over time and not perish or depreciate) and unit of account. <\/span><\/p>\n
Although Bitcoin is increasingly\u00a0used as<\/span>\u00a0medium of exchange,\u00a0<\/span>it is highly debateable\u00a0<\/span>whether it will ever function strongly enough as a store of value and unit of account given its highly volatile nature.\u00a0<\/span>Furthermore,\u00a0<\/span>Bitcoin also face<\/span>s<\/span>\u00a0<\/span>stiff\u00a0<\/span>competition from central banks\u00a0<\/span>and countries who would be highly reluctant to forgo their dominant positions as issuers of fiat money. Many are already experimenting with digital currencies that utilise blockchain technologies.\u00a0<\/span>\u00a0<\/span><\/p>\n
It is\u00a0possible the comments of\u00a0Peter\u00a0Thiel<\/span> may have not garnered the attention they <\/span>undoubtedly will if<\/span>\u00a0<\/span>they<\/span>\u00a0had come any other\u00a0<\/span>source, yet some of his claims, although\u00a0<\/span>tendentious<\/span>\u00a0<\/span>are certainty food for thought<\/span>,<\/span>\u00a0and may,\u00a0<\/span>in a perverse way<\/span>,\u00a0<\/span>be somewhat<\/span>\u00a0positive if they incite further discussion around cryptocurrencies amongst regulators.<\/span><\/p>\n
Dr Tim King<\/a> is Senior Lecturer in Finance<\/a>, Banking<\/a> and Innovation at Kent Business School and Director of the Centre for Quantitive Finance.<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"
Billionaire tech investor Peter Thiel courted controversy recently by highlighting Bitcoin\u2019s potential in undermining the US dollar\u2019s position as a global reserve currency. Thiel shared … Read more<\/a><\/p>\n","protected":false},"author":74553,"featured_media":7268,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[124,151356],"tags":[19171,261682,17600],"_links":{"self":[{"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/posts\/10753"}],"collection":[{"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/users\/74553"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/comments?post=10753"}],"version-history":[{"count":6,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/posts\/10753\/revisions"}],"predecessor-version":[{"id":10759,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/posts\/10753\/revisions\/10759"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/media\/7268"}],"wp:attachment":[{"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/media?parent=10753"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/categories?post=10753"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.kent.ac.uk\/kbs-news-events\/wp-json\/wp\/v2\/tags?post=10753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}