Last updated on June 29th, 2015 at 12:46 pm
As you may know, Ron Paul is predicting an upcoming failure for the US dollar. He asserts that since the US dollar was taken off the gold standard in 1933, the only thing preserving the value of the dollar is the confidence of people. Ron Paul asserts that this confidence will not endure because of the aggressive printing and creation of money.
But what does this have to do with bitcoin? Well, if Ron Paul is correct and the value of the US dollar decreases, all else the same, the price of bitcoin and other cryptocurrencies may rise. The rise in bitcoin’s price will be due to a three factors.
First, as the value of US dollars is changed, and the value of bitcoin is unaltered, it will require more US dollars to get the same about of bitcoin as before. This is a principal that is true with any currency.
The second reason involves the perceived value of unchanging coin creation. Bitcoin and other cryptocurrencies don’t face the same issue that fiat faces in this regard. Cryptocurrencies are programed to create a certain amount of currency in a defined amount of time. No government or any other body has power to dictate how many bitcoins are made. Because of this predictable pattern, people can be more confident in the future value of bitcoin from a supply perspective.
The last reason is that if the US dollar fails to meet the requirements of a good currency, people will move to other methods of exchange. One essential characteristic of money is that it is a medium of exchange. Money allows people to trade and conduct business easier. If the US dollar is not stable, then people will look to currencies that are. With this is mind, it is unlikely that people will try to buy and sell using gold again, especially in our world of internet sales. More likely, people will adopt something they have heard of: bitcoin. This rise in use, which will increase the price of bitcoin as well.
If trust in the US dollar decreases, the price of other currencies will rise. In a world with large governments and with little trust, perhaps bitcoin is the future.