From its inception in 2009, Bitcoin spent its first five years in obscurity before coming to light. Seven years down the line, it is the most sought after digital currency. Even though Bitcoin is now a widely recognized cryptocurrency, it is still an alternate currency used by less than one percent of the world population.
Bitcoin is currently facing the uphill task of fighting against established monetary systems and fiat currencies, which have been around for hundreds of years or more. The main advantage of Bitcoin over existing fiat currencies is its decentralized nature: it is a truly global currency with no one country claiming ownership over it. Even though the current market capitalization of Bitcoin is a small fraction of the current world economy, it has made a huge dent on the established financial sector.
Bitcoin is a promising contender when it comes to creating a new international standard of currency. Currently the United States dollar is considered as the reserve currency of the world, but using the currency belonging to one particular country in the world carries dangers. It creates an imbalance in the global economy, with one country (the US in this case) having the power to influence the global economy, politics, etc. to their benefit.
One doesn’t have to go further than current geo-political and military conditions to understand the influence of a strong reserve currency belonging to one nation. As most of the international trade is conducted using reserve currency, the undue power imparted to the United States because of its currency is unimaginable.
Having a truly global currency which is not owned by any country, bank or financial institution will create a leveled playing ground, giving equal opportunity for all countries to pursue trade and bilateral relations with the country of their choice. The Cuban trade embargo, economic sanctions against Iran, Russia and even India at one time are good examples of how countries can misuse a reserve currency to influence change for their benefit while putting the development of other countries in jeopardy. The only way it can be countered is by redistributing the power evenly across the world, which Bitcoin is perfectly capable of doing.
The speed at which Bitcoin transactions happen makes it an ideal currency for cross border trades, as well. Bitcoin–along with blockchain-based smart contracts–has the potential to streamline international trade. In the coming years, Bitcoin may replace the US dollar as the reserve currency, overtaking Chinese yuan and other potential contenders.