Is BTC a Solution or a Beneficiary?

As mind-boggling as it may appear, is this total debt really so bad? Debt, after all, can stimulate growth, enabling a country to build roads, bridges, canals and universities, as well as pay pensions and ensure a higher well-being of its nation.

The 2010 paper "Growth in a Time of Debt," by Carmen Reinhart and Kenneth Rogoff, was published around the time Greece's economy was floundering, and the paper's conclusion reportedly spurred public and quasi public officials - including those at the International Monetary Fund - to flip from stimulative to austerity in their response to Greece's debt woes.

"Government debt becomes problematic when it appears likely that future tax collections will be insufficient for the debt to be paid back. Debt default is the ultimate sign of fiscal irresponsibility and will harm a defaulting nation's ability to borrow in the future."

For a country like the United States, which is servicing its debt and has sustained growth as well as strong economic and fiscal institutions, large amounts of debt are not necessarily a problem, Lastrapes added.

The assumption of some is that the price of Bitcoin and other cryptocurrencies could soar if and when the debt bubble bursts.

As Erik Voorhees said on an earlier occasion with respect to U.S. debt and a potential situation in which corporations will become unable to repay their debts, "Fiat is doomed... watch what happens to crypto."

Why $10 million? At that point, Bitcoin provides a sufficient reserve to alleviate the world's debt burden.

"Bitcoin would be worth between $180 trillion and $210 trillion. Assuming world debt had reached $500 trillion at that time, remember it has grown by 394% over the past 20 years, Bitcoin would represent a 40% reserve against the debt."

Public debt recorded on a blockchain could make it easier for lenders and borrowers both to evaluate emerging risks associated with debt, avoiding problems like the recent Tuna Bonds scandal in Mozambique, where that nation's government failed to disclose $1.2 billion in loans to the IMF as required under a funding accord.

In the near and intermediate future, there are still some useful ways crypto and blockchain technology can impact global debt, such as supporting lending transparency in emerging markets.