Money is widely known for three purposes firstly a unit of account medium second exchange and storage of value.Now, the new popular narrative is that bitcoin will do it.It basically acts as a store of value, like digital gold, replacing an asset as a means of narrative exchange, given the technique and the ongoing process
First, unlike gold the bitcoin is not a security currency. Central banks own gold.Because it can be a ready source of foreign exchange, especially for US dollars, in times of crisis.Ideally, foreign central banks would like to create one.A swap line agreement with the Federal Reserve for conversion into your local currency.In US dollars, for emergency mobilization. During this crisis, access to the US dollar.Financing becomes costly or impossible, putting local banks at risk.
Defaulting due to an inability to continue funding its US dollar positions.Such an exchange Lines between central banks become insurance when such a crisis occurs.However, these swap lines pose a risk to the Fed. When defaulting, the Fed faces losses from the defaulting foreign exchange.Currency Therefore, these swap items are usually allocated.Independent with good credit standing
There is an alternative to these barter lines.Gold can also act as a guarantee of access to the US dollar during such a crisis.This is why gold holds value because of its repeating historical patterns.Securing access to liquidity in times of severe crisis.Until now, Bitcoin It has not yet established its role as a collateral currency let alone a key currency
Posted Using LeoFinance Alpha