To replace the dollar, the value of the bitcoin should be multiplied by 29

The study explains what should happen for the world to opt for the cryptocurrency to treasure and perform most of the exchanges. They calculated the global capitalization to which all the bitcoin in circulation should go to surpass the dollar. It should go from worth $ 7500 to $ 213,000

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The dollar is our currency, but it is also your problem. "The famous phrase pronounced in 1971 by John Connelly, US Treasury Secretary, to European officials who demanded him because he was depreciating strongly, is getting bigger. Today the dollar is a real problem for the rest of the world, facing a US public debt that looks out of control, a fiscal deficit and current account that costs to reduce and a combative rhetoric by President Donald Trump that does not help either. to calm the nerves.

Faced with this panorama, many people wonder if the dollar will be able to sustain its role as the most used currency in the world, as it has been until now since the Bretton Woods agreements in 1946. Because although there are already several currencies who tried to challenge their monetary leadership (the euro was the best prepared challenger), all ended up failing in their eagerness to dispute the throne.

However, there are many who believe that the future will go through cryptocurrencies, called to displace centralized currencies, ie under the orbit of central banks.

The last one to get on this futuristic train is the UBS bank, which, in a recent report, analyzed the value of bitcoin, the most famous virtual currency, to replace the dollar as a world reserve unit and used to make the most of the exchanges.

Multiply by 29
According to the study, there is still a long way to go to fulfill the dream of the majority of investors in cryptocurrencies. Seeing the bitcoin prevailing in the real economy and replacing the dollar in notes and coins, traveler's checks and in the money supply is still an illusion, given the current market conditions. To achieve this, the value to which the bitcoin currently trades should be multiplied by 29 and reach US $ 213,000 (at the moment, a bitcoin is worth a little below US $ 7500), according to UBS analysts.

To reach this value, the experts calculated the current number of bitcoins in circulation (about 17.88 million, with an expected ceiling of 21 million in the year 2140), as well as the global capitalization that should reach to dethrone the dollar (US $ 3.6 billion, when today it is located at US $ 127.3 billion).

"Our results suggest that bitcoin, in its current form, is too unstable and limited to become a viable means of payment for global transactions or an asset type of the most demanded," the report states.

The instability of bitcoin is easy to appreciate, when you see that in just 12 months of 2017 its value grew by almost 1900%, then collapsed by 50%. There are many who argue, such as the Nobel Prize winners in Economics Joseph Stiglitz and Jean Tirole, that it is a speculative bubble from which to escape and, instead, opt for less risky investments.

As for the limits raised by the report, today the Bitcoin network does not have enough computing power to sustain all the transactions required by a global currency. Because with a daily volume of about $ 30,000 million, the capacity of bitcoin should go from one megabit to 2 gigabits, according to UBS specialists. This means multiplying it by 250 times, something difficult to achieve in the short and medium term.

Because of the way in which the network was established (through blockchain technology, which provides security for its operation), this limitation can complicate the dream that the main virtual currency will finally become the replacement of the dollar. But this should not prevent the community that manages the network later from deciding to increase its computing power. In this way, more operations could be carried out simultaneously and at a higher speed, when today it takes a few minutes to make a transaction with bitcoins.

For speculation
As expected, as the value of bitcoin became more volatile, its use for commercial transactions declined. In fact, a study by the specialized consultancy Chainanalysis showed how it went from a volume of U.S. $ 411 million in September 2017 to U.S. $ 60 million in May of this year. In that sense, the report of the UBS maintains that up to 70% of the variations in the price of bitcoin are explained by speculative movements, which hinders the path towards its conversion into a global currency.

"As of today, it still does not work, it is common that the net cost of a transaction with bitcoins is much higher than that of a credit card transaction," said Kim Grauer of Chainanalysis.

"When the price grew so fast during the past year, in one day you could lose $ 1000 if you spent it," the analyst added, setting the tone that most people still prefer to use it to speculate.

In that sense, the high cost of a transaction (it came to $ 54 last December) prevents the payment from growing with cryptocurrencies of small purchases like a coffee or the super list.

Until now, where it increased most its use was for payments from freelance suppliers and sellers of sites like eBay (generally located in other countries), a more efficient and profitable practice than with traditional financial services.