The new chief of the San Francisco branch, of the privately held, Federal Reserve Bank has stated that Bitcoin cannot, and will not ever replace the US Dollar. First of all, they are doing a fantastic job and understand their market and duties. They cannot step into this job and say anything else and expect to keep it.
I get it, Bitcoin is printed without supposed backing, although it is backed by a lot of physical hardware assets and electricity. Fiat currency, especially the US Dollar is printed and floated without any controls or restrictions. Well, actually, the only control and restriction is that there is none. The Federal Reserve prints at will and on demand, without limitation or backing of any sort, and they have long abandoned the gold standard.
The fact that the Federal Reserve would comment at all on this matter and mention Bitcoin, to me, is very telling that it is very much a possibility. When you have this much money put into something that is being traded worldwide, every second, and such an ecosystem I think it is an excellent contender to the US Dollar and fiat currency in general. Remember, fiat is backed by nothing as well and printed without any limit. Most cryptocurrencies actually are limited in how many coins can be mined or minted at any rate.
Cryptocurrency is currently at a $421 Billion USD market cap and I think it won’t be long before it is in the trillion dollar range. This is ultimately the worst nightmare for any central banker with so many competitors, of course your number one priority should be outlawing them and shutting them down.
On that end the Fed is right to do it and is doing their job well. However, for people who don’t essentially control the fiat financial system, we would do well to root for cryptocurrency as an alternative system. I think both systems can survive and work together, but if fiat pushes it too much, I think there may be a digital currency revolution that far surpassed the digital rights movement of the late 90s and early 2000s that caught the RIAA and MPAA by surprise.