It’s no secret that the United States of America is the world’s most powerful country. Yes, that has to do with military power but also with economics. The United States dollar is the world’s reserve currency. Oil, chocolate, coffee and all kinds of commodities are traded everywhere in the world for dollars. And the country that owns the coin, owns the power as well. And that’s the US.
While that gives the Northamerican country a privileged position in controlling the world’s markets and economies, not every other country in the world is so terribly happy about that and some countries are trying to find ways to wriggle out of the dollar’s dominance. But what options do they have?
Two words: digital assets. Yes, cryptocurrencies could be the way to go in this regard. Let’s not forget that when the mythical Satoshi Nakamoto gave the blockchain to the world (as well as Bitcoin and the start of the whole crypto thing) he had the very specific purpose to do away with the traditional world financial system. That’s been the point from the very beginning and it could just happen in the next few years.
The USD power stems from the fact that it can travel the world. For that, it uses the SWIFT system, which is 43 years old, very outdated, very slow, expensive and unreliable. But it’s been monopolistic so there have been no alternatives for decades. Until now.
These days we have two blockchain networks that can compete (and beat) the traditional SWIFT system. Not only that, they don’t need to use USD to send value all around the world but they’re based on cryptocurrencies. Those two networks are Ripple and Stellar Lumens. Both blockchains are offering banks, remittance services, and other financial institutions the advantages of decentralized ledgers and blockchain technology so money can flow between countries much more quickly, much more cheaply and more securely than it does in the current SWIFT system, and they have managed to recruit some really important partners and clients to achieve that.
And this is how the USD could lose its dominance as the world’s main currency to either Ripple’s XRP or Stellar Lumens’ XLM. Or both. As Ripple and Stellar get a bigger share in the international transfer market, the USD would lose the protagonist it’s enjoyed since the ’40s and then the US would lose also some of its political power all around the world. Unilateral trade embargos would be much harder to impose, and the influence over the markets would also lessen.
And that wouldn’t be such a bad thing if you take into account that the US Government has acquired such high levels of debt that the world is in constant danger of yet another global crisis if it should default in its payments. A financial system based on decentralized assets would be more neutral, less volatile or subject to political forces or to errors in Wall Street, which has been the way in which the last two global crises have started.
So maybe we’ll see Satoshi’s dream come true. And maybe we’ll all be better off for that.
[Image courtesy of wikimedia.org]
Disclaimer: All information provided through this article should not be regarded as investment advice, nor should be taken for granted for crypto trading purposes. Before making any investment or trading plans, make sure to inquire about the information diligently by carrying out your very own research. Thank you.