In the Bitcoin community, we often hear the U.S. dollar called an “exorbitant privilege.” Namely, that the U.S. benefits disproportionately from the dollar’s reserve currency status. This article will detail why the current financial system has, in fact, been a burden on the United States, why the fiat dollar system is ending and what that means for the future of Bitcoin.
First, what is a global reserve currency? In short, it is the currency that governments and large international entities like central banks hold to facilitate global trade, credit, accounting and often to back their own currencies. The U.S. dollar holds this position today.