Home Investing & Trading What Happens to Bitcoin if the US Dollar Crashes?

What Happens to Bitcoin if the US Dollar Crashes?

by Brandon Harville

What is a bitcoin worth to you?

At the time this article was written, you’d probably say it’s worth somewhere around $8,600.

Or, you might be one of those people who believe that one bitcoin is worth one bitcoin.
If you’re part of the latter, we hate to rain on your libertarian parade, but most people invest in cryptocurrency for the same reason they invest in anything else. They want money. Tangible, fiat money they can withdraw from an ATM and spend on whatever they please.

That’s not to say there aren’t other benefits that come from holding bitcoins and other cryptocurrencies, because there are. They’re easy to track, even easier to send money across borders, and protect against chargebacks if you’re a vendor.

Still, the fact remains: much of the general public is interested in Bitcoin because of its relation to the dollar. Or euro, pound, yen, whatever.

The Question Rages On

What would happen to Bitcoin if the dollar suddenly implodes?

There’s been a lot of talk about the economic fallout of a collapsing dollar and, spoiler alert, it’s not good. But that doesn’t necessarily mean Bitcoin will collapse with it. For starters, there’s a finite supply of bitcoins—21 million tokens. And once all 21 million have been released into the economy, that’s it. No more will be created. In other words, don’t expect to see the same hyperinflation with Bitcoin as there was in Venezuela or Zimbabwe. But you would expect to see that level of inflation with the dollar, provided there was a total economic collapse.

Speaking of Venezuela, the South American country experimented with cryptocurrency to mitigate their own economic implosion. It failed. Not because of cryptocurrency, but because the government wasn’t exactly transparent with how they managed their digital currency, which meant nobody wanted to invest in it. It’s not likely that Bitcoin, a well-established currency, would suffer the same fate as Venezuela’s Petro.
So, what happens to Bitcoin if the dollar fails? It’s anybody’s guess, but there are two likely scenarios:

  • Bitcoin loses a large portion of American investors who panic sell, cashing out in the form of another hard currency like the pound, euro, or yen.
  • More Americans put their money in Bitcoin until the dollar starts to recover.

Truth be told, both scenarios are likely to happen. There’s not a lot of faith in Bitcoin among the casual enthusiasts and general population because of its volatility. And the second scenario isn’t likely to happen unless the dollar really collapses—like Weimar Germany, buying a loaf of bread with a wheel barrel full of cash collapse.

Regardless of which scenario happens, one thing’s almost certain: Bitcoin will live on, and a new fiat currency will take the dollar’s place to trade with. Which isn’t anything new, because most exchanges pair their local currencies to Bitcoin already. The dollar just won’t be the standard anymore.

And while the libertarian fanboys who dream of overthrowing governments and crashing big banks are living in a fantasy, they got one thing right. Crypto isn’t going anywhere.

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