Bitcoin has, indeed, continued to gain much influence in the global financial sector. The usage of bitcoin as a means of exchange has been booming recently, and an increasing number of mainstream companies have secured it in their financial reserves. That has got many people wondering whether bitcoin could replace the dollar as the world's medium of exchange. However, many aspects make the dollar a more powerful medium of exchange than bitcoin.

Bitcoin Supply

Bitcoin's supply relies on blockchain authentication, making it quite limited compared to the dollar and other fiat currencies. Bitcoin's collection will increase into the future but, eventually, come to a halt. The bitcoin developers said in 2009 during its launch that tokens supply would not exceed 21 million tokens. The current collection is already past 18 million.

Bitcoin's limited supply means it would not be adequate to edge out the dollar in transactions. That is one of the reasons why the dollar will continue to have the upper hand as a means of exchange. According to a recent IMF report on the allocation of monetary reserves, central banks' holdings of the dollar maintained a record high of over $7 trillion. Its sharp decline amid the pandemic allowed other currencies like bitcoin to surge but, that has not significantly affected the dollar holdings.

According to financial markets experts, the Covid-19 pandemic has increased the world's reliance on the US dollar, pushing the Federal Reserve to offer more liquidity. That means replacing the dollar with bitcoin as the means of exchange would significantly destabilize global economies, including the cryptocurrency markets.

Bitcoin Security and Transparency

Bitcoin truly has several benefits attached to the security of transactions. Cryptocurrency exchanges generally involve a lot of transparency, allowing people to bank their savings without relying on the US dollar.

Bitcoin wallets offer the best security, which holds all the user's private keys to prevent unauthorized access. Modern online trading technologies, such as the robots offered on platforms like Bitcoin Prime, allow bitcoin traders to conveniently and securely conduct transactions globally.

On the other hand, certain risks are linked to bitcoin in transactions, such as the loss of passwords, hardware, scamming, and hacking. While central banks offer protection to their customers in such exchanges, bitcoin may not. The decentralization of bitcoin also raises concerns about accountability during events like hacking.

Although there is no doubt people will continue to use bitcoin in transactions, experts warn that many will be hesitant to let go of the dollar. The latter will still account for most of the day-to-day transactions. Besides, the security concerns make the dollar seem more a more secure store of value than bitcoin.

Bitcoin Value

The value of a currency is one of the key reasons people choose it over the other in transactions. Bitcoin has considerable value because of its limited supply, high divisibility, and utility. This digital currency is also impossible to fake, and it serves as a means of exchange and store of value. However, the biggest concern is that the value of bitcoin mainly depends on public perception, which makes it a highly volatile currency.

Bitcoin value will increasingly gain momentum as long as the public believes in and uses it in transactions. That might make it seem like the currency of the future. However, the significant concerns about bitcoin's capped supply, decentralization, and high volatility prove it is unlikely to overtake the dollar as the global exchange unit.

The US dollar has depreciated in the past but, many governments, investors, and customers still have a strong belief that it will continue to topple bitcoin as the world's trusted medium of exchange.