*Is It Possible For Bitcoin To Replace Central Banks?*🏛️v🏛️
Before we dive deeper to know if Bitcoin has any effect on central banks, it is important to understand the role that central banks play in an economy. Central bank policymaking supports the global financial system. For instance, the Federal Reserve in the United States is responsible for controlling inflation and maintaining maximum sustainable employment. The Bank of England ensures the stability and solvency of the financial system in the United Kingdom.
These Central banks use a variety of tactics, known as monetary policy, to achieve their mandates. Mainly they manipulate the money supply and interest rates. For example, a central bank might increase or decrease the amount of money circulating in an economy.
The biggest advantage is that a central bank builds trust in the system. A central bank-issued currency is backed by a trusted authority and can be exchanged at a universal value. If each party in a monetary transaction issued its own coins, then there would be competition among the currencies, and chaos would follow.
Bitcoin on the other hand uses a decentralized system and a decentralized peer-to-peer ledger. It has the potential to become a globally accepted payment method and revolutionize people’s access to finances and financial services.
