Nations use the US Dollar as the world’s reserve currency to trade with each other. However, some countries are trying to trade with other currencies like the Indian Rupee or the Chinese Yuan, questioning the strength of the greenback. The US dollar still seems strong at the moment, but presidential candidate Robert Kennedy Jr wants to back it with BTC or other precious metals.
Kennedy also wants to exempt Bitcoin conversion from capital gains tax, besides using Bitcoin (BTC) as one of the underlying values of the US dollar and debt obligations. He thinks that this will stimulate innovations and investments while protecting consumer privacy.
The Dollar Was Once Backed by Gold
Backing up a currency with something tangible is not a new idea. The US dollar was backed by gold until 1971. The Nixon administration ended the gold standard and started the era of fiat. The government’s assurance, instead of precious metals or commodities, backs the dollar.
Kennedy seems to believe that backing up the dollar with digital gold or actual gold will improve the fiat’s stability and credibility. He also hopes that this will curb inflation and maintain the dollar’s purchasing power.
Is Using BTC to Back The US Dollar a Good Idea
Kennedy needs to win the election first before he can pursue his bold plan. Then, he needs to consult with economic managers on how to execute it. The plan’s impact on the US dollar will become clear after its implementation. However, it is very bullish for the number one digital asset. The US would have to buy a large amount of Bitcoin, and other countries might follow suit. The demand for Bitcoin would skyrocket its price. We should also remember that several institutions like BlackRock and Fidelity will join the fray.
Robert Kennedy Jr.’s statement is what the crypto community wants. But the question is if consumers would still hold on to fiat, once they realize the advantages of crypto assets like Bitcoin.
Source: Benzinga
