Proponents of cryptocurrencies have long wanted highlight the weaknesses of the fiat currency. In the face of an insecure world shaken by a global health crisis and geopolitical outbursts, they are engaging in dialogue with the public more than ever.
In a tweet released On August 3, the CEO of Ripple, Brad Garlinghouse, shared a recent article in Bloombergwhat had examined the range of possible alternatives to the dollar as the world’s reserve currency.
The article referenced goldto several of the major fiat currencies – the and inhe yuan and the Euro – to the Special drawing rights issued for him IMFand ended with Cryptocurrencies.
Most governments are turning to blockchain technology
Garlinghouse said that The success of digital currencies in the 2020s answers the question of “trust in the financial system at the end of the day”..
“As global stocks continue to lose confidence in fiat currencies (as we see in the USD), they will choose to diversify. Our future global financial system will do the same.” dispute.
His argument is similar to that of Tom Lee from Fundstratwho had said that Bloomberg “Trust in the traditional financial system is really lost, that’s the topic. The less trust you have in the dollar, the more you look for alternatives“”
Garlinghouse argued in the context of the economic turmoil, the tears in the geopolitical order after 1989, and the tensions in global trade and investment The real advantages of cryptocurrencies are obvious:
“A year ago, many denounced these types of coins as frauds, and now most governments are paying special attention to blockchain technology. These are frictions (ie, agreements, transparency, etc.) that occurred earlier. I assumed they were VERY difficult cryptocurrencies have risen 80%, while the USD has fallen 3% so far this year. “
China’s development of a CBDC is a key example of how an emerging power is turning to innovative technologies to improve their game in the geopolitical, monetary, and technological competitions of the new century.
The dollar burden
The economic crisis of COVID-19 led to a bullish behavior of the US dollarInvestors flocked to their “port” from the start and ensured an exceptional rally of 9%.
However, this family pattern changed with the end of the crisis. July was the worst month for the dollar in ten years. The recent decline reflects growing diplomatic tensions between the United States and China and the uncomfortable deal that dominates the dollar in a turbulent and multipolar world that has been hit by the pandemic.
All analystsas Garlinghouse emphasizes They agree that the dollar hegemony is unlikely to go away immediately.
The dollar’s position as the “backbone” of global financial infrastructure “will not disappear in favor of gold / yuan / crypto / other assets in the near future,” wrote Garlinghouse. “But is it weaker today? Yes.”
The weak US response to the public health crisis and internal political polarization could have contributed to a loss of influence.and investors in the US bond market seem to be praising the country’s disappointing economic recovery.