A study carried out by the firm Ecoinometrics indicates that the boom in the adoption of bitcoin is the biggest obstacle in the face of an eventual ban by governments. To affirm this, it is based on a comparison between the circulations of national currencies of various countries with the market capitalization of bitcoin.
The study was published on November 16 by Ecoinometrics, a firm dedicated to the analysis of trends around Bitcoin and its role in the world of finance. This research indicates that one of the arguments against Bitcoin is that, if it were to grow to the point of becoming a threat to national currencies, it could simply be banned.
To assess how realistic this scenario may be, the study establishes a comparison between the market capitalization of Bitcoin and the currency of the currencies of the main countries.
The following graph shows the market capitalization of bitcoin, close to USD 300,000 million at the time of publication of the study, in relation to the money supply of the different countries.
Bitcoin is still modest in size against major national currencies, says Ecoinometrics.
The study clarifies that the currency known as M1 is used as currency, which includes the estimate of coins and banknotes in circulation and the instruments that can be converted into cash immediately. The M1 amounts are expressed in billions of US dollars (trillions for English speakers).
In addition to tripling the currency of Brazilian reals, bitcoin’s market capitalization exceeds the money supply of Turkey and Denmark. However, the bitcoin market is less than a third of the currency of countries like Canada, Australia or South Korea.
On the other hand, the UK currency is 10 times the market capitalization of bitcoin, while the money supply of the US dollar, estimated at USD 5.4 trillion, outperforms the market capitalization of the first cryptocurrency by a factor of 15.
The countries of the euro area accumulate the largest money supply above China and Japan, and all of these are at the top of the scale, marked by USD 10 trillion.
This cap represents a value that is 30 times larger than the market capitalization of bitcoin and at the same time coincides with the capitalization of gold. This separation allows the study authors to state that Bitcoin currently poses no danger to the global monetary system.
One thing is clear enough: at its current size, Bitcoin doesn’t seem like a threat to large global currencies. But give it one or two more halving cycles, and its market cap can be expected to reach the size of the physical gold market, which is 30 times its current value.
The study invites us to compare the recent bitcoin price boom with the 2017 bubble. At the present time, new circumstances not present three years ago stand out, such as bitcoin derivatives markets, more custodial services for institutions, banks authorized to hold digital assets, companies that use bitcoin as a reserve asset, or even the adoption of BTC by PayPal, are factors that deter governments. of a prohibition, inasmuch as this would profoundly affect the economy of many important players.
Among its conclusions, the study points out that The longer the aforementioned circumstances persist, the more difficult it will be to remove Bitcoin from the system. “When Bitcoin reaches the size of the gold market, central banks might start to worry, but then it will be too late. Too much integration, too much network effect, too many investors.
The study clarifies that it does not see likely that central banks will welcome Bitcoin. It is more likely, he notes, that central bank cryptocurrencies are designed so that they are not easily interchangeable with bitcoin by the average citizen.
“Bitcoin is designed to be robust at its core, and the larger the network, the more resilient it will become,” the study concludes.
Bitcoin has been rated as “better gold than gold” by the Winklevoss brothers, founders of the Gemini exchange, who, in an exhaustive comparison of bitcoin with the precious metal, reviewed by CryptoNews, find several advantages that favor that cryptocurrency. The study concludes that, with the current inflation outlook in the United States, the price of BTC may reach half a million dollars.