If you’re new to Crypto, here’s one idea you might not have heard before: Bitcoin (Cryptography: BTC) They may be ready to challenge the US dollar as the global reserve currency. Of course, that type of transformational change is making history and requires a fundamental restructuring of the global financial system.
Black Rock, his annual letter to investors this year (NYSE: BLK) CEO and chairman Larry Fink suggested that Bitcoin could replace the US dollar as the global reserve currency. Is that scenario really possible? If so, what does that mean for Bitcoin’s future?
There is clearly a lot to unpack here. The first is the whole concept of what reserve currency should be and what role it plays in the global economy. The easiest way to think about reserve currencies is to have one currency to do business in the world. So it really needs to be global. It must serve as a medium for trade and investment exchange. And it must be accepted and used by citizens of all sovereign states.
According to Crypto enthusiasts, Bitcoin meets the properties necessary to be the world’s reserve currency, at least on paper. In fact, for over a decade, the Bitcoin Bulls have argued that Bitcoin will ultimately replace the US dollar. They consider Bitcoin to be “sound money,” but Fiat currency is fundamentally flawed.
At some point, as your thinking moves on, people will prefer to hold Bitcoin over dollars. The sovereign government and central banks choose to stockpile bitcoin rather than dollars. Assets begin to be priced in bitcoin rather than dollars to promote global trade. Ultimately, the dollar became like the pound and served as the world’s reserve currency for over a century.
Everything you need to understand the context of Fink’s annual investor letter. As Fink notes in a 2025 letter, “The United States has benefited from the dollar, which serves as the global reserve currency for decades. However, it does not guarantee that it will last forever.” He specifically points out the increased debt burden in a country that has grown since 1989 at a rate three times its GDP. In 2025, it said interest payments on its debt would reach nearly $1 trillion.
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At some point, it’s just not sustainable. The growing US debt load is a potential card home, and unfortunate outcomes in America have lived beyond its means for decades. This is the point where Fink drives the house. “If the US does not manage its debt, if the deficit continues to swell, the US risks losing its position in digital assets like Bitcoin.”
Image source: Getty Images.
In many ways, what is happening in America is similar to what happened in England in the last century. Paying for two world wars at the beginning of the 20th century led to Britain nearly bankrupt, and ultimately forced to transfer its position in the world economy to the United States.
It’s hard to imagine a world where Bitcoin will take over immediately. As with the dollar replacing the pound, it requires extensive international cooperation. When dozens of countries around the world met in 1944 to launch a contract in New Hampshire, a Breton Woods agreement was needed to make it happen. In addition to holding money, the state agreed to hold dollars. This was supported by the world’s largest supply of gold at the time. And they agreed to the central bank’s role in setting a fixed exchange rate in the dollar.
A similar type of large global cooperation, including Bitcoin, could attack some people as being ridiculous. But look at what’s happening right now in tariffs and a potential trade war with China. Whenever the White House says something like, “50 countries will call us and discuss the deal,” I think of the new Breton Woods.
Current debates on tariffs and trade expose all interdependencies between fiscal deficits, trade deficits and global economic growth. We are learning about fairness and the vulnerability of the debt market and how investors’ perceptions change on the dime. The past few weeks have been a crash course in macroeconomics for many investors.
Against this backdrop, sovereign governments and central banks are beginning to stockpile Bitcoin, with the US leading the way with strategic Bitcoin reserves. Russia and China have already experimented with Bitcoin as a mechanism for international trade, particularly in the settlement of energy trade. Bolivia has said it will pay for imported electricity along with cryptocurrency, and El Salvador has experimented with sovereign debts caused by Bitcoin.
These are potential baby steps to eventually exchange US dollars one day. But something massive and consequential could be needed to make it happen, like the 1944 Bretton Woods Agreement. Just saying that Bitcoin is the reserve currency, you can’t expect it to happen overnight. However, potential changes in the global financial system may be the best reason not to start buying Bitcoin right now.
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Dominic Basulto has a position in Bitcoin. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
According to BlackRock’s CEO, one amazing reason to buy Bitcoin was originally published by The Motley Fool
