Part 1 Global reserve currency fundamentals

Way back in 2014 (when Daily Fintech was born, Bitcoin was in a bear market (priced around $500) and the last time Putin ordered an invasion of Ukraine) I wrote My explorations down the Bitcoin rabbit hole. Although this is old analysis it is still relevant today and other people who are on the same journey of exploration may appreciate the travel tales as well as the map.

At that time, the idea that Bitcoin could be seriously considered as a global reserve currency seemed like the wilder fringes of speculation. In 2022 with a major new war in Ukraine and persistently high inflation, the idea does not seem so crazy.

In this 4 part series we look at that scenario, starting with description of global reserve currency fundamentals.

A reserve currency is a large quantity of currency to prepare for investments, transactions, and international debt obligations, or to influence currency exchange rates. A large percentage of commodities, such as gold and oil, are priced in the reserve currency, causing other countries to hold this currency to pay for these goods.

Going back almost a millennium we see the global reserve currency go from Florence to Venice to Portugal to Spain to Holland to France to UK to USA. The length go time varies but if history repeats the the global reserve currency simply passes to the country with the strongest economy (currently USA, possibly soon China). In that scenario, the next global reserve currency will be the Chinese
Yuan (CNY).

It is possible that history may not repeat, but it may rhyme. That is the scenario this 4 part post explores.

Some subjects are too complex for our short attention spans, so we do 4 posts one week apart, each one short enough not to lose your attention but in aggregate doing justice to the complexity of the subject. Stay tuned by subscribing.

Part 1
Part 2.
Part 3
Part 4.

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