Will cryptos become global reserve currency if economic powers break?

This article is written exclusively for Investing.com

  • Technology makes the world smaller
  • Few arguments about the value of blockchain technology
  • The Russian invasion of Ukraine has split the world
  • How long does it take for each side to have a currency?
  • Are there any global reserve crypto candidates currently?

Globalism is the operation or planning of economic and foreign policies with a global perspective. This ideology believes that people, goods and information should cross national borders unimpeded. At its best, globalism creates a socio-economic system committed to free trade and free access to markets. In essence, it is the opposite of nationalism.

Nevertheless, globalism is a complex issue. Some interpret it as placing the interests of the whole world above those of individual countries. Another view is that the whole world is the right atmosphere for one dominant country to exert political influence.

Recent events suggest that the world is moving towards a split form of globalism, with two different ideological systems competing for global leadership. At the same time, technological developments in the financial markets, or fintech, have created a new asset class that competes with fiat currencies.

Cryptocurrencies are an ideological medium of exchange that rejects any government control or involvement. Cryptos return the power of valuing the exchange instruments to individuals who buy and sell them in a transparent market with technological advantages that increase transaction speed, improve efficiency and create a track for record keeping.

Globalism and cryptocurrencies can coexist in an ideologically split world.


Technology makes the world smaller

Those of us who were children in the 1960s and 1970s have seen the tremendous changes brought about by technological innovation. We witnessed a workplace where computers emerged and efficiency improved.

Technological advancements in the media have bombarded us with too many choices to count. As a result, communication has evolved.

The smartphones that we now have in our pockets are tools for connecting and even seeing people around the world. They are also powerful computers that can replace cameras and calculators, and they put a wealth of information at your fingertips or via voice commands. Artificial intelligence programs remember our activities, keeping our computers, smartphones and other devices one step ahead of our next search. The advances in AI have also made our lives a lot less private.

While the world’s population has grown from about three billion people in 1960 to nearly eight billion by 2022, technology has made the world much smaller.

Few arguments about the value of blockchain technology

In 2008, Satoshi Nakamoto, an anonymous person or entity, published a white paper, Bitcoin: a peer-to-peer electronic money system† Its creation, , and the other cryptocurrencies that followed depend on blockchain technology, a database that stores information electronically in digital format.

Blockchain technology was born in 1991 when research scientists Stuart Haber and W. Scott Stornetta tried to introduce a computationally practical solution for time-stamping digital records so that they could not be backdated or tampered with. Nakamoto took blockchain theory and put it into practice with Bitcoin, and he referenced the work of Haber and Stornetta in his white paper.

Blockchains maintain a secure and decentralized record of transactions, ensuring the reliability and security of a data file and generating trust without the need for a trusted third party.

The difference between a traditional database and a blockchain is the structuring of the data. A blockchain collects information together in groups or blocks that contain strings of information.

Blocks have specific storage capacities. When filled, they are closed and linked to previously filled blocks, creating a data chain, i.e. a blockchain.

Decentralized blockchains are immutable; the data once entered cannot be reversed. In cryptocurrencies and other applications, transactions are permanently recorded and visible to everyone. Blockchains are also known as distributed ledger technology (DLT).

Cryptocurrencies have caused more than a bit of controversy in recent years. Still, almost everyone agrees that the underlying blockchain technology is revolutionary, pushing financial and other business applications into the technological era.

The Russian invasion of Ukraine has split the world

It is the global reserve currency. Reserve currencies are used by countries around the world for trading and possession. The dollar has that position because of the political and economic stability of the United States.

China and Russia, countries ideologically opposed to the US, have moved away from the dollar’s dominance in recent years. China is the world’s largest producer, buying up domestic gold production.

Gold is a widely recognized reserve asset. China has also been working to make it a more accepted foreign currency worldwide.

Russia, the world’s third largest gold producer, has also increased its gold supply by buying up domestic production. However, Russia has preferred the dollar for its foreign exchange reserves.

While the war in Ukraine started on February 24, 2022, with the Russian invasion, the turning point may have come earlier in the month, on February 4.

Russian President Vladimir Putin and Chinese President Xi met at the opening ceremony of the Beijing Winter Olympics. They agreed on a $117 billion trade package, but more importantly, they shook hands on a “no limitscooperation agreement to counter the US, Europe and their allies worldwide.

the “no limitsThe alliance likely paved the way for the Russian invasion of Ukraine and could eventually lead to a forced reunification between China and Taiwan.

The nuclear powers of the world are now divided into two opposing blocs. China, Russia, Iran, North Korea and their allies on the one hand; the US, Western Europe, Japan, Canada, Australia and their allies are on the other side.

While some countries remain neutral, the world power base has split along ideological lines. The war in Ukraine poses a significant threat given the “no limitsAgreed. US and European sanctions against Russia are a lot less effective given its alliance with China, the world’s second largest economy.

How long does it take for each side to have a currency?

China is furthest towards a national digital currency that could one day become a reserve currency. On January 4, 2022, China launched its trial digital yuan through a mobile app, e-CNY. The launch expands trials across China. The new app will allow users in ten areas, including Shanghai and Beijing, to use the digital currency.

On March 9, US President Joe Biden outlined in an executive order his administration’s plans for “ensure responsible innovation in digital assets One of the initiatives is to:

“Examining a US central bank (CBDC) digital currency by giving urgency to research and development of a potential CBDC in the United States should be considered in the national interest.”

The implementing decree further emphasizes that the administration:

prioritize US participation in multi-country experimentation, and ensure US international leadership to promote CBDC development consistent with US priorities and democratic values.

Nevertheless, the fact is that the US is lagging far behind China in the release of a digital currency that could become the new world reserve currency.

The bottom line is that the shift to split globalism has put China in the lead in the digital currency race.

Are there any global reserve crypto candidates currently?

Branched globalism with competing allies linked to China-Russia or the US-EU is ideologically incompatible with the libertarian cryptocurrency asset class. For that reason, Bitcoin, , and the other more than 18,100 cryptocurrencies currently available will likely survive unless governments decide to ban them completely.

In 2021, Ray Dalio, an American billionaire investor and hedge fund manager, said that if Bitcoin Real successful, regulators will “kill itLast week’s executive order revealed that the US government does not intend to destroy the cryptocurrency market, but rather regulate and curb it to prevent systemic and other risks.

I believe that the Chinese digital currency and the US digital currency will eventually compete for dominance. The chances of Bitcoin or any other cryptocurrency taking the lead is slim. However, as global trust in governments continues to decline, cryptocurrencies that are not tied to any government or political system are likely to continue to play an increasing role in the global financial system.

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