PARIS - BY EU INSIDER - Nov 04,2023

Bitcoin has shown potential as a tool of national power and can serve various roles under confrontational geopolitical conditions. However, it is uncertain if nonstate cybercurrencies like BTC can influence global hegemony. Throughout history, major reserve currencies have been issued by hegemonic great powers, and their strength is linked to their superior position. The disruptiveness of unofficial cryptocurrencies like BTC may have implications for the redistribution of global power in the coming decades, but there is no hard conclusive evidence at this point. Strategic foresight is required to assess multiple hypothetical possibilities and determine how each could reshape hegemony. The analysis seeks to identify the plausible implications of cybercurrency for the United States' position as the leading superpower and the supremacy of the US dollar as the world's top reserve currency.

 

Bitcoin has the potential to become a major global reserve currency, as it represents a de-nationalized currency that cannot be unilaterally controlled by any state. Its introduction represents a potential catalyst for the renewal of the global monetary order, offering advantages over traditional currencies and even gold.

 

Bitcoin's promoters contend that it represents a game changer that offers algorithmic programming, transnational circuits, and apolitical governance. As its organic financial ecosystem has grown, it has attracted the involvement of mainstream economic agents, increasing its projection beyond marginal sectors. BTC could gain traction for cross-border payments, challenging the dollar's hegemony and the legitimacy of other economic paradigms such as fiat money and fractional reserve banking, although it would have to face regulatory obstacles.

In conclusion, while the idea of BTC as a major reserve currency is appealing to some, it faces significant obstacles that make it unlikely to replace the US dollar as the dominant global currency anytime soon. Its limited money supply, volatile exchange rates, and lack of political support from a powerful state all pose challenges to its widespread adoption.

 

Additionally, the concept of a borderless currency challenges the sovereignty of nation-states, and many are unlikely to give up control over their own monetary policies. However, BTC's emergence and growth as an alternative currency cannot be dismissed, and it will be interesting to see how it evolves and whether it can overcome these obstacles to become a major player in the global monetary system.

 

While BTC and other cryptocurrencies offer potential benefits as a global currency, such as algorithmic programming and apolitical governance, there are also significant obstacles to their widespread adoption as a reserve currency. The limited money supply of BTC, its volatile exchange rates, and the lack of political support from a powerful state all make it unlikely that BTC will overtake the US dollar as the dominant global currency in the near future. However, the increased international presence of cryptocurrencies like BTC could still have an impact on the global financial system and potentially lead to partial de-dollarization.

It is important to note that the use of BTC as a counter-hegemonic instrument of statecraft is still a hypothetical scenario, and there are many challenges that would need to be overcome in order for this to become a reality. However, it is clear that the potential of BTC to disrupt the global monetary order cannot be ignored, and it is possible that certain great powers may attempt to harness its counter-hegemonic properties in the future.

 

As the international projection of BTC continues to grow, it will be interesting to see how this disruptive trend will shape the future of global finance and the balance of power between states.

 

The argument that Bitcoin could actually strengthen the position of the US dollar as the hegemonic reserve currency is a somewhat unconventional view. However, the idea of using BTC to support the dollar as a means of maintaining US dominance is not without merit. BTC could indeed provide strategic advantages to the US, such as supporting technological innovation and expanding capital markets. Additionally, BTC could help counter China's efforts to boost the internationalization of the RMB through its digital currency and FinTech projects.

 

Nonetheless, it is worth noting that relying on BTC to support the dollar would still require the development of an accompanying financial infrastructure, and BTC's high volatility could pose a risk to the stability of the dollar. Furthermore, it is unclear if such a strategy could entirely counteract the challenges posed by the accumulation of structural financial problems and the rising assertiveness of revisionist states.

 

Overall, the idea of using BTC to support the dollar is an interesting proposition that warrants further consideration and analysis. However, it remains to be seen if such a course of action would be sufficient to maintain the US's position as the leading superpower and hegemonic reserve currency.

Indeed, some analysts argue that the growing use and adoption of Bitcoin reflects a broader trend of declining US hegemony and a shift towards a more multipolar world order. The 2008 global financial crisis and subsequent quantitative easing policies by the US Federal Reserve have led to concerns about the long-term viability of the dollar as the dominant reserve currency. At the same time, the rise of emerging powers such as China and Russia has challenged US geopolitical dominance.

 

In this context, Bitcoin can be seen as a reflection of growing skepticism towards the dollar and a desire for alternative forms of money and value storage. This trend towards pluralism is likely to continue as the world becomes more multipolar, with Bitcoin and other cryptocurrencies potentially playing a role in shaping the future of the global monetary system.

 

Indeed, the emergence of Bitcoin has spurred discussions and explorations into alternative digital currencies that could potentially challenge the dominance of the US dollar in international economic exchanges. While the current limitations of Bitcoin make it unlikely to overtake the dollar, it has served as an inspiration for the development of newer generations of virtual currencies that could address its drawbacks and offer innovative improvements.

 

The potential for cross-border settlements and payments through cryptocurrencies has not gone unnoticed by various nations, including the BRICS states, ASEAN nations, and Middle Eastern oil exporters, who are actively pursuing de-dollarization in their international economic exchanges. As such, it is possible that BTC's creation could indirectly contribute to the development of alternatives that may challenge the US dollar's hegemony in the future. However, it is still too early to say definitively if this will be the case.

 

Anticipating what the future might bring is always a challenging intellectual endeavor, but the analysis of plausible developments and scenarios to identify their potential strategic ramifications and assess their feasibility can be done based on historical precedents, a multidisciplinary worldview and the extrapolation of rising trends. Together, these exploratory predictions and perspectives give credence to the prospect that BTC and nonstate crypto-assets might be consequential in more than one way for the evolution of global hegemony.

 

However, it would not be wise to overestimate the weight of their direct or indirect influence. By themselves, Bitcoin and similar cryptocurrencies lack the critical mass to alter the global balance of power. Yet, their pivotal significance in the eventual redefinition of the global order might be substantially increased if the international system’s major powers (including both those that support the current status quo and those that harbor revisionist interests) harness them in their ongoing strategic competition.

After all, money is ‒ as German philosopher Friedrich Nietzsche defined it ‒ “the crowbar of power” so it remains to be seen if stateless crypto-assets play a role as chess pieces in the greatest of all games: the pursuit of hegemony.