How the blockchain breathed new life into the dollar

The case for crypto: How the blockchain breathed new life into the dollar

Scott Melker discusses how crypto assets and the blockchain breathed new life into the dollar following the 2008 Financial Crisis, even offering an escape from weakening currencies.

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So we all know that <a href="https://xpertsstudio.com/bitcoin-etfs-pull-905m-in-two-days-as-pepeto-tops-10-9m/” title=”Bitcoin ETFs Pull $905M in Two Days as Pepeto Tops $10.9M”>Bitcoin was born in the wreckage of the financial crisis as an alternative to government money.

No central bank, no political committee, no one with power to print more, freeze your account or quietly destroy your purchasing power.

The early crypto movement was not subtle about its ambitions. The banks were obsolete, fiat currencies were doomed, the dollar was a melting ice cube and blockchains were going to build an entirely new financial system outside Washington’s control.

Then crypto conquered the world and gave almost everyone a better way to use dollars.

That is not the ending that the revolutionaries originally had in mind.

The stable coin market has grown beyond 300 billion and approximately 98% of its value is denominated in United States dollars, not the euro or the yen or the Chinese yuan, the dollar.

The most successful financial product crypto has created for global use is not a new currency at all. It’s an old currency with new and better rails.

Stable coins take dollars and make them behave like the internet.

They can move across borders in minutes, they can settle on nights, weekends and holidays.

They can live in a phone instead of a bank branch, they can interact with exchanges, wallets and smart contracts anywhere a compatible blockchain is available.

For someone in New York with a bank account, three credit cards, Venmo and access to a money market fund, that may sound like a modest technological improvement.

For someone in a country with capital controls, an unstable banking system or a currency losing value by the week, it can feel like the invention of offshore banking for anyone with a smartphone.

That is the great irony of stable coins.

People are not necessarily choosing digital dollars because they trust the United States.

They’re choosing digital dollars because they trust their own currency, government and banks even less.

Crypto did not persuade the world to stop wanting dollars. It removed much of the friction that prevented the world from getting them.

For decades, the dollar’s global power rested on institutions.

International trade was invoiced in dollars, commodities priced in dollars, Central banks held dollars in reserve, Global banks borrowed and lent dollars.

The enormous depth of US financial markets made Treasury securities the default safe asset for much of the world.

But access to that system was never universal.

Opening a dollar account can require the right country, the right bank, the right documents and the right relationship with the traditional financial system.

Sending those dollars abroad can be slow, expensive, and limited by banking hours.

A dollar stable coin compresses much of that infrastructure into a simple token.

The blockchain does not create the dollar’s demand, it distributes the dollar more efficiently to people who already want it.

That difference matters because many people still talk about stable coins is this as if they’re competing with the dollar.

In reality, dollar stable coins are a delivery vehicle for it.

They are not replacing American monetary power. They are giving it an application programming interface.

Source: finance.yahoo.com