Proponents of cryptocurrency have always sought to point out the weaknesses of the fiat currency. Now an unstable world, shaken by the global health crisis and the geopolitical eruption, is forcing them to enter into dialogue with the ordinary as never before.

In a tweet posted on August 3, Ripple CEO Brad Garlinghouse shared a recent Bloomberg article describing a number of potential alternatives to the dollar as the world’s reserve currency.

The article was about gold, several major fiat currencies – the yen, the yuan and the euro – and special drawing rights issued by the International Monetary Fund, and ended with cryptocurrencies.

Most governments “seriously study blockchain”
Garlinghouse said the driving force behind digital currencies in the early 1920s was “confidence in the financial system at the end of the day.”

“As the world population continues to lose confidence in fiat currencies (as we see with the US dollar), they will prefer diversification. Our future global financial system will do the same, ”he said.

His argument was close to Tom Lee from Fundstrat, who told Bloomberg that “trust is already crumbling in the traditional economic system – that’s the point. The less confident you are in dollars, the more options you will need. ”

Amid economic turmoil, cracks in the geopolitical system after 1989, and pressure on global trade and investment, Garlinghouse argued that the inherent benefits of cryptocurrency are clearer than ever:

“A year ago, many condemned cryptocurrencies as fraud, and now most governments are seriously considering blockchain. It removes friction (eg compromise, transparency, etc.) which was previously very difficult to resolve. The cryptocurrency rose 80% while the dollar fell. The US government has increased by 3% YTD [YTD]. ”

China’s creation of a central bank digital currency is a good example of a shift in power to innovative technology to improve its game of geopolitical, monetary and technological competition in the new century.

Dollar trunks
The economic crisis caused by COVID-19 caused the US dollar to rise as investors fled early to their hiding place, leading to an exceptional growth of 9%.

But this familiar pattern has been turned upside down as the crisis continues. July was the worst month for the dollar in a decade. The recent fall reflects the escalation of diplomatic tensions between the United States and China and the difficult settlement that dollar hegemony represents in a turbulent and multipolar world, and the pandemic has provided great relief.

Analysts agree, Garlinghouse notes, that it is unlikely we will see the dollar judgment immediately.

Garlinghouse wrote that the dollar’s position as the “foundation” of the global financial infrastructure “will not disappear in the near future in favor of gold / yuan / cryptocurrency / other assets.” “But is he weaker today? Yes”.

The US’s hesitant response to the public health crisis and domestic political polarization can be said to have contributed to the loss of the soft power, and it seems that investors in the US bond market are expanding as a result of the disappointing US economic recovery.

Source: CoinTelegraph