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Covid-19 lockdown day 57 – A new global race to the top using digital currency

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julianhorack
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13 days ago7 min read

USA emerged victorious after WW2, having lost the least in the fight, and their currency became the world reserve currency as a result. All nations had to use the dollar to buy oil, an essential commodity for any country to progress. In recent years America has weaponized the dollar in an attempt to cling to its ebbing dominance on the world stage. This has resulted in trade wars and sanctions that have really slowed the rise of the other developed nations and new dominant powers on the globe. But this could backfire on America now, as those same nations begin to de-couple from the dollar and start using alternatives to the dollar to trade among themselves. Is this the way America’s empire inevitably collapses?

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America’s biggest opponent in the new multi-polar world emerging now, is China, who has borne the bunt of the trade or tariff wars. As a result however, China is now in talks with its neighbors with the view to not only launch a digital yuan, but to create a totally new currency altogether, one not associated with one sovereign nation but comprising of a basket of underlying currencies from four nations – namely Japan, Korea, Hong Kong as well as China.

Not for the first time in modern history is the world is coming up with a currency that is not sovereign, or aligned with a single nation. Admittedly the Euro was a first mover in this regard and has been going strong up until now. Whether the Euro will survive this current pandemic and concomitant global financial collapse and depression, is anybody’s guess, though it’s not looking favorable.

This new Asian currency will potentially go a step further into the future by being totally digital. It could be seen as a “stablecoin”, something digital or cryptocurrency investors may well know about. Another such currency is the IMF “Special drawing rights” currency called the SDR. Even Facebook tried to launch something very similar last year but failed. It was to be a digital currency called the Libra, also based on a basket of about four national currencies, but regulators in America were just not open enough to allow a non-sovereign currency to compete with them.

Well, it looks like China will lead the way in this regard and thereby bypass the trade tariffs, as well as the need to use the US dollar for any purchases in future, from neighboring countries or allies. And another such ally, who also happens to be America’s enemy of sorts, is Iran. And Iran is one of the biggest oil exporters on the planet. If they are open to selling oil for currencies other than the US dollar, they will bypass sanctions easily, a strategy that will work favorably for China as well as Iran.

Now there are of course other digital currencies like Bitcoin and all the numerous cryptocurrencies already out there. Many are small and insignificant but Bitcoin is a law unto itself and seems to be able to act independently of any sovereign nation. This is something America is not so happy about. They see Iran as circumventing their sanctions by using Bitcoin already.

And in the past 24 hours, Iran has upped their game in this regard. The president of Iran himself came out and ordered the government to draw up plans to push forward their own digital or cryptocurrency. In this way Iran will join China as a main investor in Bitcoin and digital currencies. Already China, for example, controls more than 50% of the global Bitcoin mining supply. Although it is still divided up among three or so main companies, all of them are inside China and therefore still under the watchful eye and long arm of the CCP or the dictatorship that runs China. So it’s something of a concern to wonder just how free or independent Bitcoin really is in the long run, when you consider the way the Communist Party could just come and nationalize all the mining farms there overnight.

And now with Iran nationally announcing their interest in furthering their Bitcoin mining too, we could be on the verge of the next level of the global currency wars, where America now has to face up to it’s enemies and competition using new technology that could allow them to leapfrog ahead into the next era, leaving America and the dollar in the dust. Without global dollar hegemony, America’s days could be numbered as a leader. Their bullying tactics may be insufficient.

Remember that China is used to being the empire of the world, and having been humiliated in the twentieth century, they are not going to stop now until they have global domination in the 21st century. Whether that occurs by soft power of a hot war, they will persevere. So this current world war has already started. China is simply using deep state or shadow tactics, and it’s a war in all but name. The financial sector is where the war is raging right now, along with cyberspace and the tech race.

With blockchain technology on the rise, digital currencies are the future. China and now Iran are wholeheartedly embracing them, so it’s up to America whether they will stay abreast or fall behind a this crucial stage. Iran, for example, already controls 4% of the total Bitcoin hashrate globally, and with the president’s demands (in a similarly dictatorial manner to China) it looks like they are making their moves in a big way. Their Bitcoin hash power has doubled in the past nine months already. They were one of the first countries to officially recognize cryptocurrency mining as legitimate almost a year ago, and have been giving out licences by the thousand to miners of Bitcoin.

Whether this will tilt the tables of global finance or power is uncertain, but it definitely could boost Bitcoin to new heights. Every country will have its slightly nuanced regulations regarding Bitcoin and crypto mining, not wanting to facilitate too much capital flight of course, but it looks like the next era of digital and financial tech has arrived and the scramble is on for first mover advantage. America may be dragging their feet because they were already in a comfortable position of leadership. But those chafing under the restrictions being imposed by them may have simply been hungrier to escape into their own sovereignty, as any nation would, and may have thus had more incentive to embrace the new alternative, as untested as it may be.

We can only observe from the sidelines as the larger superpowers and new dogs on the block fight it out for the biggest piece of the pie. It could still get messy and those Chinese, American and Iranian naval vessels could still end up going into a hot war. We are at a turning point in the historic power grab on the planet. Let’s see where it takes us. There will always be multiple levels of operations, both overt and covert. And the future leaders will need to be a step ahead in the tech and information war to really succeed. May sanity prevail whomever comes out on top.

Refs: https://www.coindesk.com/rouhani-bitcoin-mining-iran
https://www.coindesk.com/chinese-government-advisers-propose-regional-stablecoin-for-4-asian-countries

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