The Volatility of the US Dollar

by David Neilson

After a month of relative stability, with its price hovering around the 2.25 mbtc mark, the price of the US dollar entered another downward trend over the past week with the price hitting a low of 1.7452 mbtc earlier today. The past year has been extremely volatile for the dollar. From a price of 7.8125 mbtc one year ago, the dollar crashed dramatically to a low of .862 mbtc on November 29. After a couple of rebounds the price flattened out for about a month before entering its current downward trend.

The US dollar is an extremely unstable fiat currency that is not backed by any sort of cryptography, precious metal, or any other commodity. It is created when the Federal Reserve Bank (Fed) prints currency or when a bank simply loans money it doesn't have to customers through a process known as fractional reserve banking. Over the past one hundred years the dollar has lost 96 per cent of its purchasing power, making saving dollars a losing proposition.

Bitcoin is a cryptocurrency with predictable rate of inflation that will slow down at regular intervals over the next forty years until it stops when a total of 21 million bitcoins have entered circulation. Because of its deflationary nature, the purchasing power of bitcoin increases over time, making saving bitcoin profitable.

The US dollar is expected to continue its downward spiral as the Fed continues criminally negligent programs such as Quantitative Easing, from which there is no hope of recovery. Because of bitcoin's deflationary nature combined with the inflationary spiral of the US dollar, we could see the dollar dropping to .001 mbtc or lower over the next few years.

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