Will Cryptocurrencies Undermine the Hegemony of the US Dollar and the International Banking System?

September 27th 2020 | كتبها

Cryptocurrencies, like Bitcoins and kindred mint, are essentially computer programs that create “exchange value” in virtual space. Although the US dollar value of one bitcoin, as the predominant form of cryptocurrency, has been fluctuating wildly over the last few years (or even months and weeks), a bitcoin stands today at somewhere between $10,000 – $11,000.A report by Fortune Business Insights says that “the global cryptocurrency market size stood at USD 754.0 million in 2019 and is projected to reach USD 1,758.0 million by 2027”. So this is definitely a growing market.

More importantly, virtual currency does not abide by a central bank or government potentially spelling an end to monetary policy, or the ability of a central bank to control money supply, and therefore the interest rate and the exchange rate.

Cryptocurrency is simply a bunch of computer programs maintained by network users/ miners, who can be anyone with the appropriate computing resources, and who receive cryptocurrencies as a reward. No banking system or financial establishment is needed as an intermediary. And speaking of financial inclusion, cryptocurrencies allow access to anyone with an internet link. Cryptocurrencies can be transferred across borders anonymously, and transactions in cryptocurrencies can be conducted securely and safely on a one-to-one basis without any oversight, or even taxation.

Perhaps virtual currency creation is a sheer reflection of the ongoing transformation into a virtual economy. Perhaps it’s a prelude to Artificial Intelligence (AI) controlling the global economy and the international financial system (if you like conspiracy theories). Perhaps it represents the quintessential core of globalism recreated without central banks and governments. But how can there be globalization without international banks?! Will the miners of cryptocurrencies become the new lords of the virtual globalized economy?

Big questions loom in the horizon. Yet while our noses get stuck in the COVID 19 thing, a crypto new world is being formed right under our masked noses.

Ibrahim Alloush

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