The unlikely reality of Bitcoin as a reserve currency

Reserve currencies are the foundation of global finance, acting as a stabilizing force and a universal medium of exchange that facilitates international trade and investment. Traditionally, they have been the domain of established fiat currencies like the US dollar, which currently dominates global reserves. According to the International Monetary Fund (IMF), USD accounts for approximately 58% of global foreign exchange reserves as of 2024.

However, the dollar’s position in the global economy has gradually weakened as more and more international trade is settled through the Chinese yuan and even cryptocurrencies. Bitcoin’s role in global finance was put under the spotlight when former US President Donald Trump suggested BTC could be used as a reserve currency.

While many dismissed the statement as political pandering, it sparked intense debate among economists, policymakers, and the broader crypto industry. The idea of a country with the size and influence of the US adopting BTC as a reserve currency raised fundamental questions about the future of global finance, the role of the US dollar, and the feasibility of integrating a decentralized digital asset into the existing financial system.

In this report, CryptoSlate will examine the feasibility, implications, and potential consequences of Bitcoin becoming a reserve currency in the US. We will examine the characteristics that make a currency suitable as a reserve asset, analyze the current global reserve currency landscape, and assess how Bitcoin could fit into or disrupt this framework.

The report will also delve into the logistical, regulatory, and market challenges that would need to be overcome for Bitcoin to be adopted as a reserve currency. Finally, we will consider broader implications for the global economy, including potential shifts in international power and the impact on Bitcoin’s core decentralization and financial freedom principles.