September 29, 2020

Bitcoin's key role in the post-dollar world of the future

In the post-dollar world of the future, the contours of which have already begun to emerge today, Bitcoin is assigned the main role. A new Cold War between the US and China will lead the world into a post-dollar era ...

С тех пор, как 20 января 2017 года к власти в Donald Trump has come to the United States, the US policy towards China has changed course from reconciliation to aggression. The methods used by China in various areas of its interests: trade, theft of intellectual property and military actions, are constantly condemned by Donald Trump.

After Xi Jinping's plans became knownto turn China into the dominant world power by 2025, Donald Trump did not fail to respond to them. Behind Donald Trump, a consensus is forming between Republicans and Democrats on the position the United States should take on China.

From now on, the United States will act decisively and in an offensive manner. The United States no longer intends to abandon all of China's attempts to become the world's leading power in the coming years.

In 2018, Donald Trump began active hostilities in what is now called the trade war between China and the United States.

As part of this trade war, the United States applied numerous economic sanctions against China to force Beijing to buckle in many areas.

China did not let itself be pushed aside and, in turn, also retaliated against the United States.

A new cold war is brewing between the US and China

Escalating tensions between the twocountries influenced the economies of other major world economic powers, whose role can only be reduced to observer status in what many now call the "New Cold War."

The coronavirus pandemic that swept the world in the first half of 2020 is believed to have originated in the Chinese city of Wuhan. Which only added fuel to tensions between the United States and China.

Donald Trump seized the opportunity to openly blame China for being responsible for thousands of deaths in the United States due to the coronavirus outbreak.

Then he said that China should pay forthe spread of the new coronavirus in the world, for economic damage, as well as for human lives carried away by this pandemic. Once again, China has denied all the charges, and it seems that more and more it is showing its true face - the face of a great world power that wants to defeat the United States, pushing it out of the leading positions on the world stage.

Tensions between China andThe United States also manifests itself in Hong Kong and Taiwan. Now China wants to regain control over its territories, which until now enjoyed a special political status.

Acting as a guarantor of democracy and freedom, the United States is trying to lend support to Hong Kong and Taiwan, which have the gift of fueling tensions with China.

Now there are all the signs that the model of the world order is moving in the direction of bipolarity, to which everything should come in the coming years.

The role of the poles will be played on one side by China,and on the other, the United States. Between these two super-powerful world powers, the European Union, Russia and India will have to decide which side to take. Join one of the two camps, or try to keep your own voice.

In Russia, many are in favor of these three powers acting as allies as a counterpower of the bipolar world of the future, which is now being projected by the United States and China.

The American dollar is an incredible weapon for the United States

American world domination is rooted in its currency. The US dollar has been the world's reserve currency for decades:

Distribution of world reserve currencies for the 4th quarter of 2019. The share of the US dollar in world reserves was about 61%. : IMF

As of the end of 2019, over 60% of the world's foreign exchange reserves were held by the US dollar.

This dominance of the U.S. dollar has intensified further withearly 2020. The measures taken by the Fed as part of its response to the current economic crisis have led to the emergence of a significant volume of the US dollar around the world.

Recognizing this problem, many countries, starting with China and Russia, want to end the hegemony of the American dollar..

Many people think that this is impossible. Indeed, there is a well-known mantra that is often repeated: "Don't fight the Fed." The dominance of the US banking system and the liquidity of the US dollar, which are supported by the Fed, are likely to provide undeniable superiority in the global monetary and financial system for an indefinite period of time.

Others will tell you that the US dollar cannot be substituted for the simple reason that there is no reliable alternative.

China, Russia and many other countries would like to break the hegemony of the American dollar

China intends to try to reduce itsdependence on the US dollar, as shown by its initiative to create a sovereign digital currency. The adoption of the e-renminbi could well benefit China's Belt and Road Initiative. Really, The US dollar also draws its strength from the fact that it is used in most of the world's trading operations.

Using the e-RMB can be seen as an attractive alternative for countries and companies wishing to trade with each other without having to use the US dollar.

The latest statistics also show that China has been one of the main buyers of gold for several months. The goal of these actions is to use gold as a hedging instrument to reduce dependence on the US dollar.

Russia has also followed this strategy for several years, as evidenced by the dynamics of its gold reserves:

In recent years, Russian gold reserves have grown significantly. The graph shows the dynamics of Russia's gold reserves since 2006. : IMF, Bloomberg

Thus, over the past 5 years, Russia has spent more than $ 40 billion on a sharp increase in its gold reserves.

At present, gold accounts for over 20% of the reserves of the Central Bank of Russia.

Euro could be a serious alternative to the global hegemony of the US dollar... At the same time, the euro already accounts for 20% of the world's foreign exchange reserves.

However, political uncertainty inThe European Union has not yet given sufficient guarantees. The European Commission's recent plan to support its stimulus budget to tackle the effects of the coronavirus, fueled by pan-European taxes, could make a difference.

Some see this as the first foundations of genuinefinancial union (with a single fiscal policy and jointly guaranteed public debt), and therefore, ultimately, the famous United States of Europe. This decision is still far from being made, but it is likely to greatly increase demand for the euro..

Another innovation that is likely to reshuffle the cards globally is the weakening of ties between the United States and Saudi Arabia.

Fixing the oil price in US dollars is one of the main reasons why most central banks and global investors want to maintain the priority of the US dollar.

Since the United States declared its energy independence through shale oil production, Saudi Arabia's strategy was to put constant pressure on American shale oil producers... How? By lowering the prices of their oil so that the activities of American oil companies are no longer profitable.

This has created tremendous tension between the Trump administration and Saudi Arabia.

Since the United States does not intend to change its energy strategy in the future, Saudi Arabia will have to find a new preferred buyer for its oil. Given its colossal energy needs, China is likely to be such a buyer..

If China were to become the preferred buyer of Saudi Arabia's oil, it would certainly demand that the price of this oil be set in yuan.

This would enhance the decoupling effect, reducing the need for the US dollar globally.

Also questionable is the position of the Fed, which from the verythe beginning of the coronavirus crisis supported the policy of the US government, constantly buying up Treasury bonds in increasing volumes. For the purchase of state. bonds Fed Prints Huge Amounts of US Dollars Even Despite Risks of Hyperinflationary Cycle.

It can also contribute to a decrease in confidence inthe US dollar for hundreds of millions of people around the world. Indeed, many are beginning to feel that the US dollar no longer has any real value, as the Fed can print three trillion dollars in the blink of an eye.

The image of the coming post-dollar world is becoming more and more clear.

Bitcoin will play a critical role in the post-dollar world

The advent of a bipolar world order, in which the United States and China will be at war with each other, could weaken the US dollar's status as the world's reserve currency.

Since nature abhors a vacuum, an alternative must appear in case the US dollar loses its omnipotence.

As I explained earlier, the euro, gold and electronicyuan are potential alternatives to the US dollar. However, these various alternatives suffer from serious disadvantages. The answer may be a more politically neutral and less restrictive solution.

This "people-driven" solution is Bitcoin.

The undoubted advantage of Bitcoin is thatthe fact that he has no leader. It belongs to all its users. Thus, Bitcoin is politically neutral. Its monetary policy is not determined by any particular country or particular person. It is written in the source code of the Bitcoin protocol. And only the full consensus of the entire Bitcoin community can change the fixed 21 million Bitcoin supply.

This will never happen, because Bitcoin's monetary policy is its greatest strength. She highlights the merits of quantitative tightening (QT - quantitative tightening)

In a world where digitalization is becoming the norm, Bitcoin should already be seen as the internet's money protocol.

Bitcoin will facilitate trade between all players worldwide. It will free us from the domination of the United States and the notorious extraterritoriality of American laws..

Countries Wishing to Build Bitcoin Reserves intheir central banks will be able to participate in ensuring the security and operation of the network. And the most wonderful thing for them will be that they can become more independent from the United States.

Iran, which has been hit hard by US sanctions, seems to want to go this route with its desire to become the largest mining player on the Bitcoin network.

In the future, more and more countries trapped between the US and China will also want to free themselves by opting for bitcoin. This fact is beyond doubt.

Russia is still hostile to Bitcoin, but sooner or later the country will come to revise its positionas Bitcoin represents a huge opportunity and for her in her quest to completely free herself from the US dollar.

The big problem will be China, whose electronicthe yuan is an attempt to thwart Bitcoin's rise. It remains to be seen whether the Belt and Road Initiative will expand the spread of the e-yuan beyond its national territory.

Either way, Bitcoin is bound to play an important role in the post-dollar world of the future.

No one can know how far this new one will gocold war. But we can be sure that the uncertainty it creates is bound to benefit Bitcoin, which is primarily a hedge against uncertainty.