The US Debt Crisis and the Future of Bitcoin

As the scale of U.S. national debt exceeds $36.4 trillion, the resolution of the U.S. debt crisis and the sustainability of the dollar's international hegemony have become hot topics. This article will explore America's debt economic model, the debt risks currently faced by the internationalization of the dollar, and the feasibility of U.S. debt repayment plans, as well as analyze the role that Bitcoin may play in future international settlements.

The Establishment of the U.S. Debt Economic Model

After the collapse of the Bretton Woods system, the US dollar became a fiat currency, no longer backed by precious metals, but rather by the national credit of the United States. On this basis, the United States established a debt-based economic model: global trade is settled in US dollars, the US maintains a trade deficit, and other countries acquire US dollars; countries purchase US Treasury bonds and invest in US financial products, achieving a dollar repatriation. This model has perpetuated the hegemony of the US dollar.

Risks Facing the Internationalization of the US Dollar

The internationalization of the US dollar faces two major risks:

1. Contrary to the return of manufacturing. The internationalization of the dollar requires maintaining a trade deficit, while the return of manufacturing would reduce the deficit, leading to a shortage of dollars and hindering its status as an international settlement currency.

2. Commercial real estate debt crisis. After the pandemic, the demand for office space has declined, and U.S. commercial real estate is facing huge risks. $1.5 trillion in commercial real estate debt is due next year, which could trigger a financial crisis.

Analysis of US Debt Repayment Plan

1. Selling gold: Not feasible. Gold reserves are crucial for the United States' influence in the international financial market; selling them would be seen as a "desperate measure," triggering a liquidity crisis in U.S. debt.

2. Selling Bitcoin: Not feasible. The scale of Bitcoin held by the United States is far from sufficient to repay the massive US debt. Establishing a large-scale Bitcoin reserve also faces many challenges.

3. The anchoring of the US dollar to Bitcoin: unreasonable. This will threaten the internationalization of the US dollar, weaken its international status, and the US lacks sufficient Bitcoin reserves to support it.

4. Manipulating the US dollar through Bitcoin: unrealistic. The decentralized nature of Bitcoin makes it difficult to be manipulated, and its substitution effect with the US dollar is limited.

The Impact of Debt Crisis on International Settlements

The inability to repay US debt and the intensifying imported inflation, if combined with the commercial real estate debt crisis, could trigger a financial crisis. In the short term, Bitcoin may decline along with the financial markets, but the long-term outlook is positive:

1. Bitcoin, as a scarce liquid asset, will highlight its hedging properties.
2. After the crisis, trust in the traditional financial system collapses, and Bitcoin will be favored as an independent asset.

Can Bitcoin Become the Future International Settlement Currency

Bitcoin has the potential to become the next generation international settlement unit:

1. As a medium of exchange, it can effectively capture global liquidity and facilitate cross-border transactions.
2. The function of value measurement is continuously improving, and application scenarios are constantly expanding.
3. As the supply decreases, the value storage function will strengthen.
4. Has the widest consensus and recognition in cryptocurrency.

As the dollar system may collapse, Bitcoin is expected to play an important role in the future international settlement system. However, the realization of this prospect still requires time for verification and market selection.