Over the last decade, Bitcoin has grown from a niche cryptocurrency teething on the edge of financial stock markets to becoming a legitimate digital asset that attracts investment from major investors across the globe. Given its vast popularity and continued steady footing in the global economic market, many have started to question whether Bitcoin could eventually become the global currency reserve. Theoretically speaking, there could be a possibility of this in the future, but for now, Bitcoin would have to overcome some monumental hurdles for this to happen, given the dominance of the US Dollar and the complex web of mechanisms it would need to navigate through in the global economy.
Does Bitcoin Qualify?
For Bitcoin to become the global reserve currency, it would need to eclipse the US Dollar or significantly rival the power of the US dollar globally to be considered for this change. This would imply that central banks and governments around the world would deem Bitcoin a suitable currency to hold primary assets and conduct international trade with.
For a currency to become the global reserve, it needs to meet strict criteria. It must be a store of value, a unit of account, and a medium of exchange. Bitcoin does not even tick these three criteria. Whilst it is a unit of account and a store of value, Bitcoin has yet to make waves in daily transactions for people. This means that it has yet to fulfill its role as an accountable medium of exchange. You don’t go into a shop and see items for sale displayed alongside BTC.
Whilst Bitcoin has been working on this with the expansion of cryptocurrency in general and lending itself to becoming more accessible to everyday transactions through initiatives like Bitcoin Hyper, which is aiming to normalize Bitcoin transactions and allow for more rapid and reduced fee transactions, it has yet to crack this in the wider financial economy. For those who buy Bitcoin Hyper, they will be able to access this Layer 2 strategic currency, which facilitates the spending of Bitcoin but in a way that is more conducive to day-to-day transactions. But this remains very much a work in progress.
Appeal of Bitcoin
Many are drawn to Bitcoin thanks to its decentralized 24/7 nature, which allows it to be free from the shackles of domestic policy or the borders of governments, removing bias and political history. Bitcoin has also limited its supply to a fixed 21 million coins, making it very stable, which had been a huge concern for many when cryptocurrencies originally entered the global economic market. 
The stability of Bitcoin allows it to remain free from inflation through policy changes or market manipulations of markets. This avoids issues that fiat currencies have faced in the past with governmental policies of hyperinflation.
Challenges For Bitcoin
One of the main issues with Bitcoin’s current financial stability is hoarding. Companies that managed to attain considerable chunks of Bitcoin in years gone by are now holding on to the digital asset. This means that they will continue to hoard this currency, with the likes of Strategy (Bitcoin Treasury and AI software developer) holding a vast 3% of the entire Bitcoin worth raising ethical issues.
Reports have suggested that if should Strategy reaches 5%, then it would be impossible for Bitcoin to become a global reserve currency. This is reflective of an overall trend of hoarding, where substantial amounts of Bitcoin are held by around 121 different corporations, placing limits on how truly decentralized it really is.
Hoarding is not Bitcoin’s only limit. It remains a volatile cryptocurrency and would struggle to free the anecdotal shackles of this. There remains concern about its environmental impact and its scalability through transactions, where it remains sluggish compared with other financial processes. Bitcoin would also have to overcome an incredibly large cultural shift from governments around the world for this to happen, something that is hard to imagine for the near future.
A Gold Alternative
Just like gold does, Bitcoin could be used as a tool to combat inflation, currency devaluation and to resolve geopolitical issues. The scarcity of Bitcoin allows it to draw comparisons with the gold standard. 
Many countries have already sought to trial Bitcoin in this regard, with El Salvador being perhaps the most famous example, opting for Bitcoin as a national reserve and accepting it widely as legal tender in a bid to stabilize the country’s economy. This could be a trend that grows globally and cements Bitcoin in this role as a global reserve asset. For now, that appears to be the ceiling that Bitcoin may hit; it would take a lot to replace the US dollar as global reserve currency.
