Janine Subgang is a well-known Web3 community leader, with an impressive track record in the industry. At 24 she was the Executive Director of a Dutch VC fund, before she…
View Posts

 The Dollar-Days are over: The Rise of Cryptocurrencies in International Trade

Oh, darling, have you noticed the changing winds? The US has played watchdog for quite some time, managing to tick off a fair number of countries along the way. If you’ve been too busy scrolling through social media, allow me to clue you in on the world’s latest drama: a massive paradigm shift with the BRICS nations (Brazil, Russia, India, China, and South Africa) stealing the spotlight. Banks are collapsing, Saudi Arabia and Iran are whispering peace, and countries are side-eyeing the US dollar, pondering other currencies for their reserve. And wouldn’t blockchain be such a fabulous fit? Gather ’round, and let me spill the tea.

Once upon a time in the 1970s, President Nixon struck a deal with Saudi Arabia: they’d price oil in US dollars, and in exchange, the US would provide military defense. This forced other countries to stash US dollars, making it the world’s most popular currency. A marvelous privilege indeed, allowing the US to print money and buy oil practically for free. Being the global reserve currency made US treasuries the go-to safe bet for investors  (I know this statement seems ironic today). People figured the US could never default on its debt, since it can print ad infinitum. For more than half a century, countries have been acquiring vast amounts of US debt as a safe investment. 

But honey, times have changed. China and Russia have been purchasing fewer treasuries over the past decade. Rather than holding U.S. debt as an asset, they have been increasing their gold reserves. India, too, is amassing a stockpile of gold. It appears that the BRICS nations are working toward returning to a gold standard. Under this regime, currencies would once again be pegged to a scarce commodity that many have used as a store of value for thousands of years. But it is unlikely that these states will settle the majority of transactions using physical gold, given the difficulty of transporting and securing it. What is certain, though, is that Russia is now allowing countries to purchase its oil in rubles, yuan and, perhaps soon, rupees. Though cumbersome to transport and secure, gold has a certain charm as a scarce commodity, especially the fact that it’s not the US dollar. As this shift unfolds, a handful of countries will reduce their US treasury holdings, opting for foreign currencies and all the gold they can get.

Switching from the US dollar to other global currencies isn’t all champagne and roses. There are pesky exchange rates, storing multiple currencies, and counterparty risks, among other things. But. Wasn’t there this thing thats all hype and rage? Digital money? Directly transferred? The golden cup

Crypto: It’s become clear that, compared to gold, crypto is a superior store of value. Authenticating gold is tricky, while transporting and securing it is quite the headache. The BRICS countries and their allies will likely embrace crypto as their new BFF for transactions and accounting.But let me introduce you to the belle of the ball: cryptocurrency. Faster payments, a global payment structure, and the ability to back it with anything (or nothing) make cryptocurrencies the life of the party.

Some potential advantages include:

  • Reduced transaction costs: Say goodbye to those hefty transaction fees from banks and financial institutions. With cryptocurrencies, international payments become faster and easier on your wallet.
  • Speed: Cryptos don’t drag their feet like traditional bank transfers, which can take days. Nope, with the right setup, we’re talking minutes or even seconds for transactions to go through. 
  • Transparency and security: Blockchain technology, which underpins cryptocurrencies, provides a transparent and secure ledger of transactions. This can reduce the risk of fraud and enable easier tracking and auditing of transactions.
  • Reduced currency risk: With cryptocurrencies, parties can ditch the rollercoaster of fluctuating exchange rates. Transactions are done in one universally accepted digital currency, making life a whole lot easier.

So, bad days to be an international currency pegged to a country that has tilted most of the global east. Especially when you’re currently printing millions and heading towards a potential hyperinflation. The US dollar, and by extension, US hegemony, is in for a rude awakening if the BRICS nations can agree on a cryptocurrency to settle trade. Reduced reliance on the US dollar, challenging US control over the global financial system, and shifting power dynamics are just a few of the consequences. If the BRICS nations pull it off, other countries may follow suit, leading to a more diversified and decentralized financial world.

Though this transformation won’t happen overnight, the US should be quaking in its boots. The time is ripe to consider a Western-aligned global currency that isn’t the US dollar. Because, darling, change is coming—and it’s dressed to kill.

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts