Could Bitcoin Replace The U.S. Dollar?

Could Bitcoin Replace The U.S. Dollar?

The price of Bitcoin has jumped almost eight-fold since March to $40,000, and enthusiasts say it's headed to $100,000. People rightly don't trust governments to manage their currencies. But this segment of What's Ahead cautions that Bitcoin and other cryptocurrencies are not yet substitutes for the dollar. 

Here's why.

Bitcoin is way too volatile to be used as money. Imagine if you had taken out a mortgage worth $250,000 in Bitcoin last March; you'd owe the bank $2 million today.

The supply of money must expand to meet the needs of a growing economy. But the maximum amount of Bitcoin that can be “mined” is fixed. 

For cryptocurrencies to seriously challenge the dollar and other government-made money, they must be fixed in value—preferably tied to gold or to the Swiss franc—and the supply of them must be able to grow as economies grow.

Follow me on Twitter. Send me a secure tip. Steve Forbes is Chairman and Editor-in-Chief of Forbes Media.

Steve's newest project is the podcast “What's Ahead,” where he engages the world's top newsmakers,…Steve Forbes is Chairman and Editor-in-Chief of Forbes Media.

Steve's newest project is the podcast “What's Ahead,” where he engages the world's top newsmakers, politicians and pioneers in business and economics in honest conversations meant to